Chinese share prices tumbled to close 7.73 percent down yesterday, the biggest single-day percentage loss in more than a year after the central bank announced new tightening measures, dealers said.
Shares fell across the board following Beijing’s latest move to tighten credit conditions, with a number of blue-chip stocks falling the maximum daily limit of 10 percent.
“Investors see the sudden 100-basis-point hike in reserve requirement ratio as a red flag on the economy and they are worried about corporate earnings in the second half,” Jacky Zhang of Capital Securities told Dow Jones Newswires.
The benchmark Shanghai Composite Index, which covers A and B shares, closed down 257.34 points at 3,072.33 on turnover of 60.7 billion yuan (US$8.8 billion).
The key index has fallen nearly 50 percent since a peak on Oct. 16 last year, almost giving up all the gains from a stamp duty cut this April. It was the index’s sharpest fall since June 4 last year, when it lost 8.26 percent in a day.
The Shanghai A-share Index lost 270.02 points at 3,223.17 on turnover of 60.3 billion yuan. The Shenzhen A-share Index shed 84.99 points at 973.43 on turnover of 28.1 billion yuan.
State media yesterday cited a senior economist as saying that China’s economy was likely to grow about 10 percent this year despite the global slowdown, and that the government expected to rein in inflation.
Growth will be slower than last year’s 11.9 percent, but China’s fundamentals remain strong, the National Bureau of Statistics’ chief economist Yao Jingyuan (姚景源) was quoted as saying by the official China Securities Journal.
He said a more open and market-based economy was among the driving forces in China’s economic growth that would continue to support expansion.
“The growth is fast, efficiency is improving and people’s livelihoods are becoming better,” he was quoted as saying.
However, he insisted China would not experience runaway inflation, without elaborating on the reasons.
“It’s impossible for hyperinflation to appear,” Yao said.
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