Market falls at midday over inflation talk

By Lydia Chen  |   2008-6-23  |     ONLINE EDITION

SHANGHAI'S key stock index fell in the morning session today after the central bank said it will toughen measures against inflation to lessen the effect of higher fuel prices.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 1.57 percent, or 44.37 points, to 2,787.36 at 11:30am.

Losers in the Shanghai market outnumbered gainers 436 to 321 while 42 were unchanged. The index lost 37.06 points or 1.3 percent in a wild ride that saw big swings from day to day last week.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 0.35 percent, or 2.77 points, to 791.97 this morning.

China Merchants Bank Co and Ping An Insurance (Group) Co paced declines on concern earnings will be eroded. Aluminum Corp of China Ltd, also called Chalco, dropped after saying first-half profit will probably decrease by more than 50 percent.

Investors started selling shares after Zhou Xiaochuan, the governor of the central bank, said the country may formulate "stronger policies" to tackle inflation. Higher energy prices will pressure the consumer price index higher, Zhou told reporters in New York on Friday.

China Merchants lost 3.04 percent to 23.90 yuan (US$3.48) while Industrial and Commercial Bank of China, the country's biggest lender, was down 1.35 percent to 5.11 yuan.

Ping An was among losing insurers this morning. Ping An decreased 1.71 percent to 49.50 yuan while China Life, the biggest insurer, buckled 2.51 percent to 24.90 yuan.

Aluminum Corp of China Ltd, the nation's largest producer of the metal, said its first-half profit will fall by more than 50 percent because of higher costs and production disruption from snowstorms. The stock lost 4.85 percent to 12.35 yuan.