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Tight liquidity pulls index to 3-week low
SHANGHAI'S key stock index yesterday fell to a three-week low after liquidity tightened and the Chinese central bank said it would maintain a "prudent" monetary policy due to stubborn inflationary pressure.
The Shanghai Composite Index dipped 0.2 percent to end at 2,463.05 points, the lowest since October 28.
"China cannot loosen price controls because the country is still facing inflationary pressure," the People's Bank of China said in its third-quarter monetary report on Wednesday after the market closed.
The PBOC has withdrawn 2 billion yuan (US$315 million) from the financial system through open market operations this week, ending net injection for two consecutive weeks.
The seven-day repurchase rate, a measure for borrowing among banks, rose for the third day yesterday to 3.55 percent, the highest since November 8.
Analysts also attributed the tight liquidity to the number of initial public offerings this week. Six new firms raised a combined 1.98 billion yuan, almost three times the amount last week.
"The good performance of newly-listed firms boosted investor interest in buying new shares, which further squeezed market liquidity," said Chen Yong, an analyst at Lianxun Securities.
Poly Real Estate, China's second-largest developer by market value, fell 0.5 percent to close at 9.35 yuan.
The Shanghai Composite Index dipped 0.2 percent to end at 2,463.05 points, the lowest since October 28.
"China cannot loosen price controls because the country is still facing inflationary pressure," the People's Bank of China said in its third-quarter monetary report on Wednesday after the market closed.
The PBOC has withdrawn 2 billion yuan (US$315 million) from the financial system through open market operations this week, ending net injection for two consecutive weeks.
The seven-day repurchase rate, a measure for borrowing among banks, rose for the third day yesterday to 3.55 percent, the highest since November 8.
Analysts also attributed the tight liquidity to the number of initial public offerings this week. Six new firms raised a combined 1.98 billion yuan, almost three times the amount last week.
"The good performance of newly-listed firms boosted investor interest in buying new shares, which further squeezed market liquidity," said Chen Yong, an analyst at Lianxun Securities.
Poly Real Estate, China's second-largest developer by market value, fell 0.5 percent to close at 9.35 yuan.
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