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China's share benchmark falls 5 percent on reserve rate hike news

China's share benchmark falls 5 percent on reserve rate hike news

Chinese stocks sank Tuesday following the central bank's latest credit-tightening move.
By late morning, the benchmark Shanghai Composite Index had lost 161.51 points to 3,164.16. The Shenzhen Composite Index of China's second, smaller market was down 6.4 percent at 944.31.
Chinese financial markets were closed Monday for a national holiday, so Tuesday was the earliest chance for investors to react to a weekend decision by the central bank ordering banks to keep more deposits on hand.
The People's Bank of China ordered a 1 percentage point increase in the reserve ratio, half to be done on June 15 and the rest on June 25. The phased-in increase, the 15th in the past 18 months, was aimed at easing inflation that is at 12-year highs without unduly slowing the dynamic economic growth needed to create jobs.
After the increases, banks will be required to keep 17.5 percent of their deposits in reserve _ a record high ratio.
Property firms and banks, industries most likely to feel pressure from the reserve rate hike, led the decline. Industrial & Commercial Bank of China shed 4.9 percent to 4.47 yuan and Bank of China dropped 6.1 percent to 5.51 yuan.
Property developer China Vanke tumbled 8.7 percent to 17.96 while Poly Real Estate Group slipped 9.4 percent to 16.04 yuan.
Airlines also fell back on worries over high oil prices, which raise operating costs. Air China lost 7.5 percent to 11.30 yuan and China Eastern Airlines plunged 8.9 percent to 9.17 yuan.


Updated : 2021-05-16 15:16 GMT+08:00