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People's Daily Online>>China Business

Index dips as investor sentiment weakens

By Lu Nengneng (Shanghai Daily)

09:55, December 09, 2011

Shanghai's key stock index closed slightly lower yesterday after swinging between gains and losses, as investor sentiment dimmed due to a report that China's economy would grow at a slower pace.

The Shanghai Composite index shed 0.1 percent to close at 2,329.82 after the morning fluctuation sent the gauge to a 33-month low of 2,302.64 at one point.

Investors turned gloomy after the Chinese Academy of Social Sciences projected on Wednesday that China's gross domestic product would grow 9.2 percent this year, 1.2 percentage points slower than last year's pace, and even below 9 percent in 2012.

Meanwhile, short-selling dominated the yuan-US dollar trading and this pushed the yuan to the low end of its permitted daily trading range for the seventh day yesterday.

"The falling exports amid a global economic downturn, risks of local government debt default, rising housing prices and unregulated private lending may affect China's economy, which has changed foreign investor expectations for a yuan appreciation," Yu Yongding, academician at the Chinese Academy of Social Sciences, said.

Financial shares were mixed as investors were unsure if the central government will keep fine-tuning policies.

Minsheng Securities said in a note the government may ease limits on liquidity next year as the economy is slowing while consumer prices seem to be trending down.

The Industrial and Commercial Bank of China shed 0.2 percent to end at 4.16 yuan (66 US cents). The Bank of China gained 0.3 percent to close at 2.29 yuan.

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