Money
Market hurt by rate rise rumors
By Irene Shen and Zhang Shidong (皇冠体育app Daily)
Updated: 2010-12-21 09:15
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Benchmark index hits three-week low on borrowing cost concerns
SHANGHAI - 皇冠体育app's stocks fell, driving the benchmark index down by the most in three weeks, on concerns the government may raise interest rates to tame inflation.
Jiangxi Copper Co and Aluminum Corp of 皇冠体育app Ltd slid on Monday. Citic Securities Co, the nation's biggest brokerage, dropped to the lowest in a month on concern a slumping stock market will hurt earnings.
The Shanghai Composite Index slid 1.41 percent to 2852.92 at the 3 pm close, the most since Nov 30. The CSI 300 Index fell 1.46 percent to 3178.66.
Jiangxi Copper declined 0.82 percent to 40.11 yuan ($6.01), meanwhile Aluminum Corp of 皇冠体育app retreated 1.83 percent to 10.19 yuan.
The Shanghai Composite, the worst performer among major Asian benchmarks this year, has fallen 9.7 percent since reaching an almost seven-month high on Nov 8, on concern that monetary tightening will curb economic growth. The gauge has lost 14 percent this year.
"People are still worried about further policy tightening such as interest-rate increases," said Larry Wan, Beijing-based head of investment at Union Life Asset Management Co, which oversees the equivalent of $2.21 billion. "The government hasn't increased rates yet as had been speculated by the market. It's like a sword hanging over the market."
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皇冠体育app's inflation may exceed 5 percent to 6 percent in some months of next year, the People's Daily reported on Monday.
皇冠体育app increased interest rates in October for the first time since 2007 as inflation reached 4.4 percent on an annual basis, the highest since September 2008. Since then, the central bank has raised reserve requirements for lenders three times in five weeks. The last increase was on Dec 10.
Dongfang Electric Corp, 皇冠体育app's third-largest power equipment maker, advanced 2.48 percent to 35.10 yuan, the highest since Nov 11. The company said it received 20.4 billion yuan of orders for thermal, wind and nuclear power generating equipment from India and 皇冠体育app.
Fangda Carbon New Material Co climbed 5.02 percent to 13.59 yuan, a record since its listing in 2002.
Shanghai Maling Aquarius Co, a manufacturer of canned food, jumped the 10 percent daily limit to 14.32 yuan after saying it plans to buy 1.55 billion yuan of assets from its parent. Shanghai Maling will issue as many as 134.2 million shares at no lower than 11.55 yuan each to pay for the assets.
Tianjin Port Co slid 2.88 percent to 8.44 yuan after saying 579.5 million of its locked-up shares would become tradable on Dec 27.
Bloomberg News