Shanghai stocks fall amid 'tight' rumors

By Ding Yining  |   2008-7-16  |     NEWSPAPER EDITION

SHANGHAI stocks plunged yesterday with real-estate developers dropping steeply after the market speculated over tighter monetary policies in the third quarter.

The benchmark Shanghai Composite Index sank 98.81 points, or 3.43 percent, to close at 2779.45 points.

Losers outnumbered gainers by 744 to 113 and 51 remained unchanged. Turnover reached 75.18 billion yuan (US$10.99 billion).

The real-estate sector suffered a big loss. Gemdale Corp and Poly Real Estate Group both plunged the daily cap of 10 percent.

Poly Real Estate closed at 15.12 yuan and Gemdale Co ended trading at 8.98 yuan.

Continuing tight monetary policy and possible adjustment in the mortgage loan interest rate brought uncertainty to the real-estate market, analysts said.

"The international economy is in a recession period and major stock indexes are suffering losses of various degrees," said Zhang Qi, an analyst with Haitong Securities. "The Chinese market is no exception. (Easing) consumer prices which will be announced on Thursday and more (good) half-year reports may send the index up, though."

Banking chips also led the dive in yesterday's index. Industrial and Commercial Bank of China, the nation's biggest lender, dropped 3.37 percent to 4.88 yuan. Shanghai Pudong Development Bank lost 7.11 percent to 21.83 yuan. Bank of China, China Construction Bank and Bank of Communications all decreased by more than 3 percent.