Banks drop, bring bourse down 1.9% to 3-week low

10:12, September 17, 2010      

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China's key stock index closed down 1.9 percent Thursday, with financials such as Agricultural Bank of China falling on worries about a potential rise in bank deposit rates, while profit-taking hit small cap companies.

Tight liquidity ahead of the upcoming long holidays over the next three weeks also prompted investors to get out of current positions, as there are no clear prospects of a market rally right after the holidays.

The Shanghai Composite Index ended at 2,602 points. Analysts said the index had room to drop further but saw near-term support around the 60-day moving average now at 2,579.

Agricultural Bank of China dragged the sector lower, falling 1.87 percent to 2.63 yuan ($0.39) —below its initial public offering price of 2.68 yuan ($0.4) for the first time.

"Rate hike worries seem to be gathering momentum the longer the central bank maintains its silence," said Li Xin, an analyst at China Development Bank Securities.

Banks were the biggest weight on the market. Industrial and Commercial Bank of China declined 1.49 percent to 3.97 yuan ($0.59).

Source: Global Times


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