| Chinese share prices tumble 2.16% after hike in bank reserve requirements |
BEIJING, Sept. 7 (Xinhua) -- Chinese share prices tumbled 2.16 percent on Friday following the central bank's announcement that it would raise the bank reserve requirements for the seventh time this year.
The People's Bank of China said late on Thursday the reserve requirement ratio would be raised by 0.5 percentage points for commercial banks in order to curb liquidity and excessive growth in lending.
Although the move applied pressure on the market in the short term, it would barely dampen the bull run, which is being fueled by the yuan's appreciation, strong corporate profits, the booming economy and excess liquidity, according to analysts at the Bohai Investment Research Institute.
Most of the previous hikes in the reserve requirements failed to have a substantial impact on the market and ended up with more capital inflows enabling the market to resume its rise, they said.
The key Shanghai Composite Index, which covers A and B shares traded on the Shanghai Stock Exchange, closed at 5,277.18 points, down 116.48 points, or 2.16 percent.
The Shenzhen Component Index was down 399.66 points, or 2.21 percent to close at 17,674.10 points.
The combined turnover of the two bourses rose to 286.75 billion yuan (38.23 billion U.S. dollars) from 250.4 billion yuan.
Large banks, which pushed share prices to new highs on the previous day, performed weakly, with the Industrial and Commercial Bank of China down 2.01 percent, Bank of China down 3.13 percent and China Merchants Bank down 2.68 percent.
Steel makers were divided in their performance. Both Baosteel Group and Hansteel Group dropped more than 2 percent, while Xinjiang Bayi Iron and Steel Co. continued to rise by the daily limit of 10 percent and Guangzhou Iron and Steel Group surged 7.83 percent.
The transportation sector caught up in the afternoon as both China Eastern Airlines and COSCO Group, the country's largest shipping company, soared by 10 percent.
Automakers also recorded a big rise, with Chang'an Auto up 9 percent and SAIC Motor, the listed arm of Shanghai Automotive Industrial Group up 8.85 percent.
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