Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080611/article_362829.htm
Stocks drop on inflation concerns
Created: 2008-6-11 15:52:57
Author:Lydia Chen
SHANGHAI'S key stock index fell today amid concern that the government may take more action to control inflation after a government report showed producer-price inflation accelerated last month.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 1.57 percent, or 48.09 points, to 3,024.24 at 3pm.
The index dipped below 3,000 points during the morning session, the first time it had dropped below the psychologically important level since April.
The market sank 7.73 percent yesterday, the largest percentage drop since June 4, 2007, when it dived 8.26 percent.
Losers in the Shanghai market outnumbered gainers 621 to 185 today.
The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 2.71 percent, or 25.17 points, to 903.04.
China Merchants Bank, the nation's biggest dual-currency credit-card issuer, fell 4.78 percent to 24.10 yuan (US$3.48), extending yesterday's 10-percent slide. China Vanke, the nation's biggest listed property developer, lost 5.31 percent to 16.76 yuan.
Banks must put aside a record 17-percent of deposits in reserve starting June 15, which will rise 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 index has fallen nearly 42 percent this year on concern government measures to keep price increases in check will erode earnings.
The sharp decline has prompted calls for government action. China cut a tax on stock trading on April 23, the day after the Shanghai Composite last dipped below 3,000.
Producer-price inflation accelerated in May to the fastest pace in more than three years, the National Bureau of Statistics reported today. Factory-gate prices rose 8.2 percent from a year earlier, after gaining 8.1 percent in April.
The consumer price index, a main gauge for inflation, is to be released tomorrow morning for the month of May.
Air China was also among shares that lost ground today. The stock shed 5.82 percent to 10.35 yuan.
Air China, the world's biggest airline by market value, said it will sell stakes in its catering, ground handling and logistics units to its parent for 363.3 million yuan.
PetroChina Co, which lost 6.06 percent yesterday, was down 1.43 percent to 15.90 yuan. The company, the biggest stock on the index in terms of market capitalization, plans to raise as much as 60 billion yuan in a bond sale. The money will be used for working capital, to reduce debt and finance costs.
Elsewhere, China Railway Group Ltd, Asia's biggest construction company, fell 1.25 percent to 5.53 yuan. The company said yesterday that it won two contracts worth 5.1 billion yuan to build rail lines, express rail links and a bridge in Nanjing City, capital of Jiangsu Province.
China Shipping Development Co, the nation's biggest oil tanker company, buckled 3.38 percent to 23.75 yuan. The company ordered eight bulk carriers for US$428 million to meet growing demand for iron ore and coal.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 1.57 percent, or 48.09 points, to 3,024.24 at 3pm.
The index dipped below 3,000 points during the morning session, the first time it had dropped below the psychologically important level since April.
The market sank 7.73 percent yesterday, the largest percentage drop since June 4, 2007, when it dived 8.26 percent.
Losers in the Shanghai market outnumbered gainers 621 to 185 today.
The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 2.71 percent, or 25.17 points, to 903.04.
China Merchants Bank, the nation's biggest dual-currency credit-card issuer, fell 4.78 percent to 24.10 yuan (US$3.48), extending yesterday's 10-percent slide. China Vanke, the nation's biggest listed property developer, lost 5.31 percent to 16.76 yuan.
Banks must put aside a record 17-percent of deposits in reserve starting June 15, which will rise 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 index has fallen nearly 42 percent this year on concern government measures to keep price increases in check will erode earnings.
The sharp decline has prompted calls for government action. China cut a tax on stock trading on April 23, the day after the Shanghai Composite last dipped below 3,000.
Producer-price inflation accelerated in May to the fastest pace in more than three years, the National Bureau of Statistics reported today. Factory-gate prices rose 8.2 percent from a year earlier, after gaining 8.1 percent in April.
The consumer price index, a main gauge for inflation, is to be released tomorrow morning for the month of May.
Air China was also among shares that lost ground today. The stock shed 5.82 percent to 10.35 yuan.
Air China, the world's biggest airline by market value, said it will sell stakes in its catering, ground handling and logistics units to its parent for 363.3 million yuan.
PetroChina Co, which lost 6.06 percent yesterday, was down 1.43 percent to 15.90 yuan. The company, the biggest stock on the index in terms of market capitalization, plans to raise as much as 60 billion yuan in a bond sale. The money will be used for working capital, to reduce debt and finance costs.
Elsewhere, China Railway Group Ltd, Asia's biggest construction company, fell 1.25 percent to 5.53 yuan. The company said yesterday that it won two contracts worth 5.1 billion yuan to build rail lines, express rail links and a bridge in Nanjing City, capital of Jiangsu Province.
China Shipping Development Co, the nation's biggest oil tanker company, buckled 3.38 percent to 23.75 yuan. The company ordered eight bulk carriers for US$428 million to meet growing demand for iron ore and coal.
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