Equities decline led by raw material firms

08:49, January 28, 2010      

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Mainland stocks fell, sending the Shanghai Composite Index below 3000 for the first time since Oct 30, as banks dropped on lending curbs and raw-material producers slid on concern a slowdown would hurt demand.

Industrial & Commercial Bank of China and China Construction Bank led declines in financial companies, the worst performing industry, after banks began restricting new loans.

Jiangxi Copper Co and Aluminum Corp of China Ltd, the biggest producers of copper and aluminum, slid more than 1.5 percent.

"The market is worried that we'll get a new round of tightening with things like interest-rate increases coming soon," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co.

The Shanghai index declined 32.79, or 1.09 percent, to 2,986.61, capping a four-day, 5.5 percent drop, the longest since the period to Dec 18.

The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, declined 1.36 percent to 3,198.57.

Morgan Stanley's China strategist Jerry Lou said he was sticking to his view that China stocks will rally in the first half and stall in the second. The Shanghai Composite Index is a "buying opportunity" after dropping below 3000, he said.

"If China is tightening at an early stage, it reduces the risk of global inflation from increasing earlier and the Fed from tightening earlier. I'm a lot more worried about a US tightening than China tightening," he said.

Hang Seng falls

Hong Kong stocks declined, dragging the benchmark Hang Seng Index lower for a sixth day, as Hang Lung Properties Ltd reported earnings that missed estimates and concern grew China will step up measures to rein in growth.

The Hang Seng Index lost 0.38 percent to 20033.07 at the close, taking losses in the past six days to 7.6 percent. The Hang Seng China Enterprises Index slipped 0.3 percent to 11,372.69.

Source: China Daily
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