Chinese shares stumbled Tuesday after the release of November
inflation figures, which showed consumer prices accelerating at the
fastest pace in 11 years.
The key Shanghai Composite Index, which covers A and B shares,
edged up 0.25 percent, or 13.16 points, to close at 5,175.08
points, after touching an intra-day low of 5,103.75 points.
The Shenzhen Component Index on the smaller Shenzhen Stock
Exchange ended at 17,036.90 points, down 0.35 percent, or 59.61
points.
The consumer price index (CPI) for November rose 6.9 percent
from a year earlier, the National Bureau of Statistics (NBS) said
Tuesday morning.
This shows that inflationary pressures are not yet easing and
triggers concern about further tightening measures, according to
the Shanghai-based SJ Stock, a consulting company.
Tang Min, chief economist with the Asian Development Bank (ADB),
said China would have to accelerate its tightening moves. "The
central bank will raise interest rates once or twice in the future
and they will act very soon."
The central bank announced Saturday that it would raise the
reserve- requirement ratio for commercial banks to 14.5 percent --
the 10th rise this year. The bank has also raised interest rates
five times this year.
Analysts said that the reserve move had helped prepare investors
for the government's intensified macro-control policies and
expectations of further interest rate hikes wouldn't shake
confidence as much as before.
Gains outnumbered losses by 578 to 234 in Shanghai, and by 433
to 203 in Shenzhen.
The combined turnover of the two bourses dropped to 160.76
billion yuan (21.72 billion U.S. dollars) from 163.80 billion yuan
Monday.
Most real estate stocks lost ground due to concern over the
possibility of rate rises, with Vanke, China's leading developer,
down 2.42 percent to 32.30 yuan and Poly Real Estate down 2.37
percent to 68.73 yuan.
Banks were weak, with ICBC down 2.40 percent, Bank of China down
1.35 percent, China Minsheng Banking Corp. down 1.67 percent and
China Construction Bank down 1.83 percent.
Sinopec, buoyed by a recent cooperation plan with Iran to
develop the Yadavaran oilfield, rose 0.52 percent to 23.15 yuan,
while PetroChina, China's largest oil producer, rose 1.62 percent
to 31.93 yuan.
(Xinhua News Agency December 11, 2007)
