Chinese shares fall 3 pct amid regional plunge after Wall Street sell-off
16/9/2008 18:00
Chinese stock prices ended the earlier session 3.16 percent lower today
following overnight heavy losses on Wall Street and despite the latest moves of
the country's central bank to boost the economy.
The benchmark Shanghai
Composite Index breached the 2,000-point level several times, but managed to
stay above the barrier at the end of the morning session. The market was closed
yesterday during the Mid-Autumn holiday.
Investor confidence was badly hit
across the globe because of the latest collapse of US investment banks.
The
Dow Jones Industrial Average plunged 504.48 points, or 4.42 percent, to
10,917.51 yesterday. The steepest drop since the Sept. 11 attacks in 2001 came
after Lehman Brothers filed for bankruptcy and Merrill Lynch agreed to be taken
over by Bank of America.
Later yesterday, the People's Bank of China
announced it would lower the lending interest rate across the board and the
reserve requirement ratio for small and medium-sized commercial
banks.
Banking shares led the decline in the morning, as the country's major
lenders are exempt from the reserve requirement ratio adjustment.
The share
price of the Industrial and Commercial Bank of China, the country's biggest
lender, plunged 9.24 percent to 3.83 yuan (US$0.56), as profit margins of large
commercial banks were squeezed by the lower lending rate.
The Bank of China
tumbled 7.74 percent to 3.22 yuan, and the China Construction Bank dropped 9.51
percent to 4.28 yuan.
Small and medium-sized banks were also hit by the lower
lending rate despite the relaxed reserve requirement ratio. The Bank of Beijing
declined 6.93 percent to 7.25 yuan and the China Merchants Bank almost fell by
the daily limit of 10 percent to 16.07 yuan.
However, investor confidence in
the property was still bolstered by the central bank moves, as analysts believed
they indicated the government's intention to maintain economic growth by solving
the funding pressure on enterprises.
The Asian Development Bank report said
the move showed the central bank was about to relax the tight policy, which was
implemented to fight soaring inflation.
The property sector rebounded on the
back of possible loosening of finance policy and the lower lending rate. Lvjing
Real Estate soared 9.97 percent to 6.73 yuan, and Poly Real Estate Group rose
6.57 percent to 12 yuan, among other property firms that gained in the
morning.
Heavy-weight Sinopec also rose 2.56 percent to 9.2 yuan after the
global crude price fell below US$95 per barrel during trading, and the country's
airlines also gained 2 to 3 percent on lower crude prices.
Xinhua
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