CHINESE A SHARES finished the day down 0.19% at 2,866.36 with the key 3,000 level increasingly becoming a faded memory, while Hong Kong's Hang Seng rose 1.26% to 23,166.22.
Machinery and foodstuffs provided some support today but not enough to keep the benchmark Shanghai Composite Index from edging lower, which added to its over 9% slide since hitting a near seven-month peak on November 8 as investors continue to harbor concerns of tighter liquidity going forward.
Over-fast inflationary growth has prompted the People’s Bank of China, the country’s central bank, to increase banks’ reserve ratio requirement twice this month which has also hit lenders’ stock market performance disproportionately hard.
Pudong Development Bank (SHA: 600000) lost 0.61% today to finish at 12.96 yuan while China’s largest bank ICBC (SHA: 601398) shed 0.69% to 4.29 yuan.
Other banks finishing lower today included China Citic Bank, down 0.36% to 5.49 yuan, Bank of China (SHA: 601988) down 0.30% at 3.31 yuan and Bocom (SHA: 601328) which finished the day’s trading session down 0.53% at 5.64 yuan.
Bucking the trend were China Merchants Bank (SHA: 600036) which added 0.15% to close at 13.28 yuan and China Construction Bank (SHA: 601939) which gained 0.43% to 4.70 yuan.
Banks are not the stocks directly impacted by interest rate hikes – real or anticipated – as property developers live and die by the relative availability of funds to feed new projects and fuel speculative activity.
The country’s largest listed developer China Vanke (SZA: 000002) lost 0.73% today to close at 8.17 yuan.
Smart grid operators, shipbuilders and foodstuff counters all had relatively productive days.
Several standouts even were halted from trade today after hitting their 10% daily upside limits.
They included: Jiangsu Wuzhong Industrial Co Ltd (SHA: 600200) closing at 7.36 yuan, XJ Electric Co Ltd (SZA: 000400) at 35.18, Anhui Gujing Distillery Co Ltd (SZA: 000596) at 90.75 and Zhejiang Longsheng Group Co Ltd (SHA: 600352) at 12.78.
So-called “smart grid” operators were in demand as China plans massive investments in systems that efficiently administer both its rapidly growing power and telecommunications networks.
In addition to XJ Electric, Rongxin Power Electronic (SZA: 002123) rose 8.59% to 50.68 yuan, Shanghai Hi-Tech Control System (SZA: 002184) added 6.17% to 16.53 yuan, Shanghai Yanhua Smartech Co Ltd (SZA: 002178) was up 6.02% at 18.85 yuan and NARI Technology Development Ltd (SHA: 600406) increased by 5.28% to 77.97 yuan.
Producers of non-discretionary items such as medicines and key foodstuffs often find it easier to pass down costs to downstream consumers in an inflationary environment.
Analysts cited in a Chinese language story in today’s SinaFinance said they expect November CPI growth to show a sequential increase of 4.4%, which would be a 12-month high.
Drug firms also received a shot in the arm today with a spike in investor interest, which allowed the following pharmaceutical firms to hit their 10% upside limit during trading hours today:
Tibet Rhodiola Pharmaceutical Holding Co (
Meatpacking giant Henan Shuanghui Investment & Development Co Ltd (SZA: 000895) hit its 10% daily upside, closing at 54.43 yuan, while Angel Yeast Co Ltd (SHA: 600298) added 5.99% to 47.06 yuan and dairy behemoth Inner Mongolia Yili Industrial Group Co (
Analysts expect continued weakness for A shares over the next week as investors keep a close eye on any signs of interest rate action from the central bank, as well as await announcements from the early-December Central Economic Work Council that sets the tone for economic policy for the coming calendar year.
See earlier:
CHINA SHARES Reclaim 1% On Banking Comeback After Massive Friday Selloff
