Fears of a Halt to Index's Rise after 4 Weeks of Gains

   Date:2012/02/14

SHANGHAI'S key stock index closed generally flat yesterday as investors were dampened by economic data that suggest a tight liquidity may loom in the market and hopes of monetary policy easing fizzled out.

The Shanghai Composite Index dipped 0.01 percent to 2,351.86 points, after recovering losses of up to 1.12 percent earlier in the day.

After four straight weeks of gains, there was a realization the momentum may be ebbing especially after the release of financial data last Friday.

The People's Bank of China said on Friday after the close of trading that the annual growth of broad M2 money supply in January eased to 12.4 percent from 13.6 percent in December. It also said that new loans slowed to 738.1 billion yuan (US$117 billion) in January. This was below the anticipated 1 trillion yuan and further fanned speculation of a tighter liquidity crunch in the market.

Banks fell. The Industrial and Commercial Bank of China slid 0.46 percent to 4.37 yuan. China Construction Bank lost 0.61 percent to 4.86 yuan.

Huang Zheng, an analyst at Western Securities, said hopes for an easier monetary policy have dimmed after the Consumer Price Index, a major gauge of inflation, rose 4.5 percent on an annual basis in January and beat the estimate. This rise forced the central bank to stay cautious toward another cut in the bank reserve requirement ratio.

Property developers also fell after a stimulus package to revive the housing market in Anhui Province's Wuhu City was stopped, reflecting the central government's unwavering stance on combating home price rises and speculation.

Poly Real Estate slumped 3.12 percent to 10.57 yuan. Gemdale Corp retreated 2.9 percent to 5.40 yuan.

 

Source:shanghaidaily

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