Inside Financial Markets

China Stocks Plunge More Than 6% as Money-Market Rates Increase

China Stocks Plunge More Than 6% as Money-Market Rates Increase

China’s stocks tumbled the most in a month, led by industrial and technology shares, as surging money-market rates signaled tighter liquidity and the offshore yuan declined for a fifth day.

The Shanghai Composite Index dropped 6.1 percent at 2:16 p.m. local time, extending its declines this year to 22 percent. The overnight money rate, a gauge of liquidity in the financial system, climbed the most since Feb. 6. The Hang Seng China Enterprises Index retreated for a third day.

Volatility is returning to mainland equities after the benchmark gauge rebounded 10 percent from its January low. Focus is shifting to China’s economic policies before the Group of 20 meetings begin Friday in Shanghai and the start of the annual National People’s Congress next week.

The Hang Seng Index lost 1.4 percent, while the Hang Seng China Enterprises retreated 1.9 percent. The CSI 300 Index declined 5.7 percent.

China’s overnight repurchase rate increased 16 basis points to 2.12 percent. Some banks were obliged to set aside more funds as reserves at a time when open-market operations are draining cash from the financial system.

Ahsan Baig

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)