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Stocks touch 14-month low on rate hike risk
By Feng Jianmin |
September 13, 2011, Tuesday
|
Online Edition
Online Edition
SHANGHAI'S key stock index fell to the lowest in 14 months today on concerns over the worsening debt crisis in Europe and that tightening policies may continue in China after new lending in August increased.
The benchmark Shanghai Composite Index dropped 1.06 percent to 2,471.3 points, the lowest since July 16 last year. Turnover fell to 51.9 billion yuan (US$4.64 billion) from last Friday's 60 billion yuan.
China's central bank said yesterday that the country would still prioritize stabilizing prices and continue its prudent stance on monetary policies after data showed inflation cooled and new yuan loans expanded in August.
Analysts said the bank may increase the withdrawal of money through open market operations and a possible interest rate hike may occur this month or in October.
Meanwhile, investors fear that the worsening debt crisis in Europe may halt the global economic recovery and hurt China's exports. Greece could default on its debt and rating agencies may cut the credit ratings of French banks because of their Greek bond holdings.
"Worries for the overseas market lingers and China's data showed economic growth is slowing down," said Deng Eryong, a strategist with Changjiang Securities. "Investors are cautious and waiting for clear signal for the outlook for economy."
Metal producers led the decliners. Jiangxi Copper Co shed 1.9 percent to 30.75 yuan. Aluminium Corp of China lost 1.7 percent to 8.72 yuan.
Banks were weak. Industrial and Commercial Bank of China dropped 1.2 percent to 4.13 yuan. China Construction Bank fell 0.9 percent to 4.53 yuan.
The benchmark Shanghai Composite Index dropped 1.06 percent to 2,471.3 points, the lowest since July 16 last year. Turnover fell to 51.9 billion yuan (US$4.64 billion) from last Friday's 60 billion yuan.
China's central bank said yesterday that the country would still prioritize stabilizing prices and continue its prudent stance on monetary policies after data showed inflation cooled and new yuan loans expanded in August.
Analysts said the bank may increase the withdrawal of money through open market operations and a possible interest rate hike may occur this month or in October.
Meanwhile, investors fear that the worsening debt crisis in Europe may halt the global economic recovery and hurt China's exports. Greece could default on its debt and rating agencies may cut the credit ratings of French banks because of their Greek bond holdings.
"Worries for the overseas market lingers and China's data showed economic growth is slowing down," said Deng Eryong, a strategist with Changjiang Securities. "Investors are cautious and waiting for clear signal for the outlook for economy."
Metal producers led the decliners. Jiangxi Copper Co shed 1.9 percent to 30.75 yuan. Aluminium Corp of China lost 1.7 percent to 8.72 yuan.
Banks were weak. Industrial and Commercial Bank of China dropped 1.2 percent to 4.13 yuan. China Construction Bank fell 0.9 percent to 4.53 yuan.
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