China stocks dive 3% after bank reserve hike

Chinese shares fell more than 3% on Monday afternoon, led by banking and property stocks, after a rise in lenders' reserve requirements and talk of a property tax in Shanghai kept bank and developer stocks under pressure.

January 17, 2011 / 15:53 IST

Chinese shares fell more than 3% on Monday afternoon, led by banking and property stocks, after a rise in lenders' reserve requirements and talk of a property tax in Shanghai kept bank and developer stocks under pressure.

The benchmark Shanghai Composite Index fell to 2,704.5 points by 0640 GMT, dropping far below the crucial 125-day moving average at 2,779. The index lost 1.7% last week amid lingering fears over monetary tightening steps.

The property sub-index fell 5.7%.

The PBOC announced a 50-basis-point RRR hike for all banks after Chinese markets closed last Friday, which will take effect on Thursday and will drain an estimated 360 billion yuan (USD 55 billion) from the market.

Shanghai's mayor said on Sunday that one of the city's main tasks this year would be to prepare for the trial run of a property tax to curb speculative investments in the real estate sector.

Top lender ICBC dropped 3.9%, while the biggest listed property developer China Vanke tumbled 7.7%.

(USD 1 = 6.6 yuan)

first published: Jan 17, 2011 01:11 pm

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