Stocks News
- Stocks end up despite bank reserve hike
Date: 11-Dec-2007 Sources: (Shenzhen Daily)
METAL makers and airline companies rose sharply yesterday, helping mainland shares reverse an early loss triggered by the disclosure of another hike in banks' reserve requirement ratio over the weekend.
The benchmark Shanghai Composite Index ended up 1.4 percent at 5,161.92 after falling as much as 2 percent on news of the ratio hike. The Shenzhen Composite Index ended up 2.6 percent at 1,352.66.
Analysts said the market's upside would be limited on liquidity pressure later this week from China Pacific Insurance (Group) Co.'s initial public offering of A shares, which is open for subscription Thursday and Friday. They put the resistance for the Shanghai index this week at the 30-day moving average of 5,260.
Earnings in the banking and real estate sectors are most vulnerable to tighter liquidity in the money market, and those stocks sank yesterday.
But metals firms led yesterday's gains on a slew of good news as the market shrugged off the central bank's announcement over the weekend that it was raising the reserve requirement ratio by 100 basis points from Dec. 25.
'It looks like investors decided not to let the hike perturb them too much. After all, stocks are now relatively inexpensive after having fallen 17 percent since mid-October,'said Zhu Haibin, an analyst at Essence Securities.
The increase, double the usual 50-basis-point hike, will bring the ratio to 14.5 percent, its highest level since the mid-1980s.
'Although the move could increase short-term volatility on the market, it won't hamper the market's recovery from the recent correction,'CITIC Securities said.
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