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Stocks dive on massive sell-off
[ 2008-06-11 14:39 ]

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The Shanghai stock market plunged 7.73 percent yesterday, the biggest one-day drop since June 2007, wiping out 1.7 trillion yuan ($246 billion) of market capitalization.

The benchmark Shanghai Composite Index slid 257.34 points to close at 3072.33, with 860 out of the 912 stocks ending lower. The Shenzhen Component Index also dived 8.25 percent, or 968.07 points to close at 10765.91.

The 88.3-billion-yuan turnover on the two bourses was, however, 35.4 percent more than Friday's, the last trading day.

Other Asian markets closed lower too. In Hong Kong, the Hang Seng Index fell 4.21 percent to 23375.52. Japan's Nikkei 225 index dropped 1.13 percent to close at 14021.17. And Australia's S&P/ASX 200 Index lost 2.8 percent, its biggest since March 20.

Analysts attributed the sharp fall in the mainland stock market to a massive sell-off by investors, worried over the government's credit tightening measures to fight inflation and to the poor performance of the US and many other global equity markets.

The central bank announced over the weekend it would raise the reserve ratio for lenders by 1 percentage point. The move shows the government will maintain the tightening measures to curb inflation despite signs that food prices are moderating, the analysts said.

The tightening measures are expected to squeeze corporate earnings further too.

"It is difficult to see a turnaround in investor sentiment in the near future even if the authorities try to boost the market through new policy measures," said Stephen Green, research head of Standard Chartered Bank (China).

Despite market insiders' worries that hot money from Vietnam may flow back into China triggering a financial crisis, some economists and experts said the impact of the Vietnamese financial crisis on China would be limited.

Liang Hong, an economist with Goldman Sachs China, said: "China's strong fiscal and balance of payments positions should minimize the impact."

(英語點津  Helen 編輯)

 

About the broadcaster:

Stocks dive on massive sell-off

Brendan joined The China Daily in 2007 as a language polisher in the Language Tips Department, where he writes a regular column for Chinese English Language learners, reads audio news for listeners and anchors the weekly video news in addition to assisting with on location stories. Elsewhere he writes Op’Ed pieces with a China focus that feature in the Daily’s Website opinion section.

He received his B.A. and Post Grad Dip from Curtin University in 1997 and his Masters in Community Development and Management from Charles Darwin University in 2003. He has taught in Japan, England, Australia and most recently China. His articles have featured in the Bangkok Post, The Taipei Times, The Asia News Network and in-flight magazines.

 
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