Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080610/article_362674.htm
Shanghai index posts biggest drop in 14 months
Created: 2008-6-10 15:46:34
Author:Lydia Chen
SHANGHAI'S key stock index today had the biggest single-day drop since February 2007 after the central bank told lenders to set aside a record amount of reserve money to curtail inflation.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, sank 7.73 percent, or 257.34 points, to 3,072.33 at 3pm.
This was the biggest loss since February 27, 2007, when it sank 8.84 percent.
Losers in the Shanghai market outnumbered gainers 795 to 11.
The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 8.02 percent, or 80.91 points, to 928.20.
Industrial & Commercial Bank of China Ltd led banks lower as the increased reserves reduces the amount of money available for lending. China Vanke Co dropped on speculation the policy will curb property developers' access to financing for real estate purchases. Air China Ltd retreated as a surge in oil prompted concern fuel costs will increase.
ICBC, the nation's biggest listed lender slumped 8.35 percent to 5.38 yuan (77 US cents). China Construction Bank Corp, the country's second-largest, fell 7.75 percent to 6.43 yuan. China Merchants Bank Co lost the daily cap of 10 percent to 25.31 yuan.
Banks must put aside a record 17 percent of deposits in reserve starting June 15, rising to 17.5 percent on June 25, the People's Bank of China said on Saturday. It's the fifth time this year that the central bank has raised the reserve ratio. The move will drain about 422 billion yuan from the financial system.
The central bank raised interest rates six times last year to curb inflation that accelerated to 8.5 percent in April, close to an 11-year high.
The Shanghai key stock index has fallen nearly 42 percent this year, the world's second-worst performer among 90 benchmarks tracked by Bloomberg News Service, on concern government measures to keep price increases in check will erode earnings. Inflation accelerated to 8.5 percent in April, close to the fastest in almost 12 years.
China Vanke, the nation's biggest listed property developer, slid 10 percent to 17.70 yuan. Poly Real Estate Group Co, China's second-largest developer by market value, also dropped the daily cap of 10 percent to 15.94 yuan.
Air China, the world's biggest airline by market value, dropped 10 percent to 10.99 yuan. China Southern Airlines Co, the nation's biggest carrier by fleet size, dropped 9.95 percent to 9.32 yuan. Shanghai-based China Eastern Airlines slumped 10 percent to 9.06 yuan. Jet fuel accounted for about 40 percent of Chinese airlines' costs in 2007, according to annual reports.
Crude oil in New York jumped US$10.75, the most ever, to a record of US$138.54 a barrel on June 6. It recently traded at US$134.93 a barrel in after-hours trading.
The surging oil price also hurt oil refiners. Chinese oil refiners cannot raise prices of their products to pass rising costs onto customers, unless they have government approval.
China Petroleum & Chemical Corp, Asia's biggest oil refiner, dropped 8.39 percent to 12.34 yuan. PetroChina Co, the nation's second-biggest refiner and the biggest market heavyweight, lost 6.06 percent to 16.13 yuan.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, sank 7.73 percent, or 257.34 points, to 3,072.33 at 3pm.
This was the biggest loss since February 27, 2007, when it sank 8.84 percent.
Losers in the Shanghai market outnumbered gainers 795 to 11.
The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 8.02 percent, or 80.91 points, to 928.20.
Industrial & Commercial Bank of China Ltd led banks lower as the increased reserves reduces the amount of money available for lending. China Vanke Co dropped on speculation the policy will curb property developers' access to financing for real estate purchases. Air China Ltd retreated as a surge in oil prompted concern fuel costs will increase.
ICBC, the nation's biggest listed lender slumped 8.35 percent to 5.38 yuan (77 US cents). China Construction Bank Corp, the country's second-largest, fell 7.75 percent to 6.43 yuan. China Merchants Bank Co lost the daily cap of 10 percent to 25.31 yuan.
Banks must put aside a record 17 percent of deposits in reserve starting June 15, rising to 17.5 percent on June 25, the People's Bank of China said on Saturday. It's the fifth time this year that the central bank has raised the reserve ratio. The move will drain about 422 billion yuan from the financial system.
The central bank raised interest rates six times last year to curb inflation that accelerated to 8.5 percent in April, close to an 11-year high.
The Shanghai key stock index has fallen nearly 42 percent this year, the world's second-worst performer among 90 benchmarks tracked by Bloomberg News Service, on concern government measures to keep price increases in check will erode earnings. Inflation accelerated to 8.5 percent in April, close to the fastest in almost 12 years.
China Vanke, the nation's biggest listed property developer, slid 10 percent to 17.70 yuan. Poly Real Estate Group Co, China's second-largest developer by market value, also dropped the daily cap of 10 percent to 15.94 yuan.
Air China, the world's biggest airline by market value, dropped 10 percent to 10.99 yuan. China Southern Airlines Co, the nation's biggest carrier by fleet size, dropped 9.95 percent to 9.32 yuan. Shanghai-based China Eastern Airlines slumped 10 percent to 9.06 yuan. Jet fuel accounted for about 40 percent of Chinese airlines' costs in 2007, according to annual reports.
Crude oil in New York jumped US$10.75, the most ever, to a record of US$138.54 a barrel on June 6. It recently traded at US$134.93 a barrel in after-hours trading.
The surging oil price also hurt oil refiners. Chinese oil refiners cannot raise prices of their products to pass rising costs onto customers, unless they have government approval.
China Petroleum & Chemical Corp, Asia's biggest oil refiner, dropped 8.39 percent to 12.34 yuan. PetroChina Co, the nation's second-biggest refiner and the biggest market heavyweight, lost 6.06 percent to 16.13 yuan.
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