Tighter policy fears hit shares
Print Edition
Shanghai shares fell yesterday over concerns China may tighten monetary policy amid increasing capital inflows and rising inflationary pressure.
The Shanghai Composite Index fell 0.83 percent, or 18.59 points, to 2,210.65.
Yuan funds outstanding for foreign exchange rose for a second month in September, up 126.4 billion yuan (US$20.7 billion) from August, a sign of rising capital inflow into the world’s second-largest economy, according to latest data from the People’s Bank of China.
The higher capital inflows triggered concern that China may tighten monetary policy.
The PBOC yesterday again suspended weekly auctions of reverse repurchase agreements. Last week it halted its regular reverse repo operations and stopped injecting liquidity for the first time since July. The suspension resulted in a net 44.5 billion yuan withdrawn from the money market last week, the biggest since March.
“We believe monetary policy is likely to be tightened in the fourth quarter as growth is on track to achieving the 7.5 percent target and inflation was stronger than expected at 3.1 percent year on year in September,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc, said in a recent report.
Bestv New Media Co, which has a joint venture with Microsoft in the pilot free trade zone, fell by the daily limit of 10 percent to 39.69 yuan after surging 6.4 percent on Monday. Shanghai Xinhua Media Co lost 5.8 percent to 10.48 yuan after surging more than 50 percent in three weeks.
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