Chinese stocks fall on PBC’s call for higher rates

China stocks fell on Wednesday amid rising expectations that central banks will tighten liquidity, pushing interest rates higher.

A senior Chinese researcher at the People’s Bank of China (PBC) has urged central banks to adopt monetary policies that do not encourage markets to expect the indefinitely lower-for-longer interest rates that encourage excessive risktaking by lenders, the Securities Times reported on Wednesday.

At the close, the Shanghai Composite Index was down 9.71 points, or 0.29 percent, at 3,293.96 points.

The blue-chip CSI300 index was down 0.60 percent, with its financial sector sub-index lower by 1.11 percent, the consumer staples sector down 0.97 percent, the real estate index off 0.68 percent and the healthcare sub-index down 0.36 percent.

The smaller Shenzhen Component Index ended up 0.52 percent and the start-up board ChiNext index was higher by 1.46 percent.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.28 percent, while Japan’s Nikkei index closed down 1.97 percent.

The largest percentage gainers in the main Shanghai index were Hangzhou Silan Microelectronics Co up 10.04 percent, followed by Shanghai Xinhua Media Co gaining 10.02 percent and Shanghai Belling Corp up by 10 percent.

The largest percentage losses in the Shanghai index were Zhejiang ChiMin Pharmaceutical Co down 10.02 percent, followed by Sichuan Langsha Holding losing 10 percent and Tibet Summit Resources Co down by 10 percent.

So far this year, the Shanghai stock index is up 6.45 percent, while China’s H-share index listed in Hong Kong is up 22.2 percent. Shanghai stocks have declined 0.41 percent this month.

So far this week, the market capitalization of the Shanghai stock index has risen by 0.20 percent to 28.85 trillion yuan ($4.36 trillion).