Liquidity concerns pull Shanghai down 7pct, Hong Kong follows
Shanghai plummeted 6.7 percent today in its largest drop since September 2008 as Hong Kong shares slipped 1.9 percent, dropping 4.1 percent in August – the market’s first monthly loss in six months.
The China Enterprises Index, representing top Hong Kong-listed mainland Chinese stocks, was down 1.4 percent. The Shenzhen Composite Index plunged 7.1 percent.
Mainland-listed stocks nose-dived on concerns about liquidity drying up as new share issues put stress on the stock market and the increasing likelihood that new loan growth probably declined further in August. A total of 380 stocks dropped the daily limit of 10 percent in Shanghai and Shenzhen bourses.
Banks led declines after China Merchants Bank (HK:3968, SH:600036) reported a larger-than-expected 38 percent hit to its first-half net profit. It also raised its maximum fund-raising target for a planned rights issue by 22 percent. The stock fell 6.3 percent in Shanghai and 3.2 percent in Hong Kong.
Industrial & Commercial Bank of China (HK:1398, SH:601398), the nation's biggest lender, dropped 3.46 percent in Shanghai but rose 0.6 percent in Hong Kong. China CITIC Bank Corporation Limited (HK:0998, SH:601998) dropped 1.3 percent in Hong Kong and 6.4 percent in Shanghai. China Construction Bank (HK:0939, SH:601939) tumbled 5.5 percent in Shanghai and 0.2 percent in Hong Kong.
Metal producers also made steep falls. Jiangxi Copper (HK:0358, SH:600352) fell by the daily limit of 10 percent n Shanghai and 4.2 percent in Hong Kong. Aluminum Corporation of China Limited (HK:2600, SH:601600) also fell by the daily limit in Shanghai and by 2.8 percent in Hong Kong.
Sinpoec (SH:600028, HK:0386) also fell by the 10 percent daily limit in Shanghai and 3 percent in Hong Kong on concerns that Beijing will not raise fuel prices in the near term.
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