China stocks plummet amid credit concerns

15:11, April 27, 2010      

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China's shares sank more than 2 percent as investors sold off amid lingering concern Beijing might tighten credit policy even more to cool bubbling housing prices.

Also, the refinancing plans that China Construction Bank and other leading lenders are to raise their capital adequacy levels via equity expansion on the stock market, unnerved investors.

It is also reported that China's Agriculture Bank will accelerate its mammoth IPO possibly before July, Chinese reports said. The IPO is estimated to collect up to 70 billion yuan on the stock market. Investors are increasingly worried about market liquidity being squeezed by the new share sells.

And, continuous uncertainties in overseas market, such as European sovereign debts in Greece and other economies, and U.S. congressional legislation on its banking industry, have driven investors to the sideline, who rather take a wait-and-see attitude.

The benchmark Shanghai Composite Index fell 61.58 points or 2.07 percent to close at 2,907.93. The Shenzhen Composite Index for China's smaller second market lost 2.13 percent.

Real estate shares continued a slide triggered by the announcement earlier this month that the Central Government will take steps to cool housing prices. The State Council, the cabinet, tightened credit supply after China reported 11.9 percent jump in GDP in the first quarter.

To rein in run-away urban housing prices, the government decided to raise down payment for a second housing mortgage to 50 percent, from previous 40 percent, in addition to hiking the mortgage rates.

The country's biggest developer, China Vanke Ltd., lost 1.28 percent to 7.70 yuan.
Banks also fell. Industrial & Commercial Bank of China Ltd., the country's biggest commercial lender, lost 1.55 percent to 4.46 yuan. China's biggest oil refiner, Sinopec, lost 2.44 percent to close at 9.99 yuan.

People's Daily Online


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