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Shares drop 0.75% on liquidity drain and new IPOs
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SHANGHAI stocks extended losses this morning as funding costs hiked after the central bank drained liquidity from the market. The pending resumption of initial public offerings also weighed on the market.
The benchmark Shanghai Composite Index shed 0.75 percent, or 15.38 points, to 2,048.29. Half-day turnover was 47.6 billion yuan (US$7.8 billion).
The People’s Bank of China today withdrew 32 billion yuan through 14-day repurchase agreements and another 20 billion yuan via 28-day contracts, according to a statement on the central bank’s website. The withdrawal followed a 46-billion-yuan drain on Tuesday.
The seven-day Shanghai Interbank Offered Rate, a gauge of funding costs, rose 94.40 basis points to 4.8 percent, the highest since February 13, according to the National Interbank Funding Center.
The market is also depressed by speculations that the China Securities Regulatory Commission will restart IPOs as soon as April after it announced revised listing rules.
Heavyweight oil stocks dragged the market down. China Petroleum & Chemical Corp fell 1.2 percent to 5.09 yuan. Sinopec Shanghai Petrochemical Co Ltd slumped 3.7 percent to 3.60 yuan. PetroChina Co Ltd lost 1.1 percent to 7.55 yuan.
Brokerages declined among financial firms. Sinolink Securities dropped 5.1 percent to 20.28 yuan. CITIC Securities, China’s biggest listed broker, shed 1.2 percent to 10.49 yuan.
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