China stocks drop on tightening, bank levy

15:27, April 22, 2010      

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China's stocks in Shanghai and Shenzhen again slumped Thursday as investors were unnerved by the possible dire straits of banking and property sectors in the coming seasons.

The rumored report that the Washington meeting of G20 finance ministers and central bankers will discuss a global taxation on banks dragged the market further down, analysts said.

The Shanghai composite stock index closed at 2999.48 points, declining 33.79 points, or 1.11 percent on a turnover of 155.53 billion yuan. The Shenzhen index lost a smaller 0.53 percent.

Huge selling of bank and property shares led Thursday's slump, as China's Central Government has vowed to clamp down on red-hot real estate prices in the cities. Banks are apparently collaterals in Beijing's effort to stave off property inflation, as it tightens lending to mortgage seekers.

The Bank of Communications, the fourth largest by business volume, plummeted 0.38 yuan, or 4.93 percent, the Industrial Bank lost 1.26 yuan, or 4.10 percent, and the China Merchants Bank dropped 0.48 yuan, or 3.27 percent.

The state-run China Securities Journal said in a commentary Thursday that China must tackle its property bubble for the sake of economic health and social health, even if the market feels some short-term pain in the process.

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