Stocks News
- Stocks drop as institutions cut exposure
Date: 10-Sep-2007 Sources: (Shenzhen Daily)
STOCKS on the mainland sank more than 2 percent Friday after the central bank announced another monetary tightening and amid signs that some institutional investors were cutting exposure to the market.
Though many small, individual investors have stayed bullish, some institutions have been lightening stock positions moderately in the last few days, fearing stocks may pull back for the short term after the index more than doubled this year, traders said.
Two senior fund management sources said that the national social security fund had over the past two days been reducing its stock portfolios, which are managed by local mutual fund houses.
The Shanghai Composite Index, which jumped 1.56 percent Thursday to a record closing high, ended down 2.16 percent at 5,277.176 points. It hit an intraday low of 5,269.250.
Losing Shanghai stocks outnumbered gainers by 669 to 173, though in a sign that investors were not panicking, more than 10 Shanghai shares rose their 10 percent daily limits while none dropped 10 percent.
Turnover in Shanghai A shares rose to 185.3 billion yuan (US$24.6 billion), near a 10-week high, from Thursday's 164.3 billion yuan.
After the close Thursday, the central bank said it would lift bank reserve ratios by 0.5 percentage points. Data to be released Tuesday are expected to show August inflation at a new 10-year high, and this could be followed by an official interest rate hike.
Analysts noted that previous monetary tightenings this year had almost no impact on the market, and said central bank action was by itself unlikely to halt the bull run.
'This will only have a limited impact. It's not aimed at the stock market, and there's a lot of money entering the market from new mutual funds,'said Zhou Lin at Huatai Securities.
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