Stocks drop for first time in seven days
THE Shanghai stock market yesterday fell for the first time in seven days, weighed down by the financial sector and profit taking in cement makers.
The Shanghai Composite Index was down 1.1 percent, the biggest drop since June 16, to 2,728.48.
Banks were weak on concerns default risks are increasing for banks after Hong Kong Economic Journal reported yesterday that an investment firm, controlled by the Yunnan provincial government, notified local banks that it was unable to pay some of its short term debts.
The crisis was solved after the provincial government agreed to pump more money into the firm, the report said.
Also, China’s central bank auctioned 2 billion yuan in one-year bills in its open market operations on Tuesday at a yield of 3.4982 percent, up 9.63 basis points from last week. The rate was 24.82 basis points higher than the one-year deposit rate of 3.25 percent, raising speculation the central bank may raise interest rates for the third time this year.
The Industrial and Commercial Bank of China shed 0.9 percent to 4.46 yuan.
Cement makers dropped the most. Anhui Conch Cement Co lost 2.4 percent to 27.13 yuan, retreating from a two-month high.