Chinese shares plunge 7.19% after Wall Street sell-off, Weak U.S. dollar pushes Chinese yuan to record high

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Chinese shares plunge 7.19% after Wall Street sell-off

www.chinaview.cn 2008-01-28 15:37:47

BEIJING, Jan. 28 (Xinhua) --

Chinese share prices closed about 7 percent lower on Monday, as investors dumped stocks after Friday's sell-off on Wall Street amid lingering fear of a U.S. recession.

On Friday, the Dow Jones Industrial Average fell 1.38 percent to 12,207.17, ending a two-day rally boosted by the U.S. Federal Reserve's emergency federal funds rate cut of 0.75 percentage points.

The benchmark Shanghai Composite Index, which covers both A and B shares, plunged 342.39 points, or 7.19 percent, to 4,419.29 on Monday. The fall neared last Tuesday's 7.22 percent drop, the highest percentage points loss in 7.5 months.

The Shenzhen Component Index sunk 1,116.18 points, or 6.45 percent, to 16,177.83.

Losses led gains by 799 to 44 in Shanghai and 627 to 31 in Shenzhen. Aggregate turnover shrank to 167.2 billion yuan (23.2 billion U.S. dollars) from 199.9 billion yuan on Friday.

A Bohai Investment analyst said the once isolated domestic market was now more influenced by other world markets. He added there was little buying interests as investors expected the U.S. subprime mortgage crisis wouldn't be tackled in a short time.

Other Asian markets also tumbled. Tokyo's Nikkei 225 Index fell 3.97 percent to 13,087.91 and Hong Kong's Hang Seng Index dropped 4.25 percent to 24,053.61.

Some jittery investors reduced holdings for safety and some locked in profits after the short-lived rebound late last week, according to Guangfa Huafu Securities.

Power and transport stocks led the plunge on Monday as a heavy snow caused blackouts and transport chaos in southern and eastern China.

Leshan Electric Power plunged by the 10 percent daily limit to 12.41 yuan and Huadian Power International shed 9.52 percent to 7.32 yuan.

Fujian Expressway Development fell by the daily limit to 9.79 yuan. Leading airlines China Southern was down 9.99 percent to 20.99 yuan and Air China dropped 9.98 percent to 21.73 yuan.

Blue chips were also heavy losers.

PetroChina, which accounts for about a quarter of the Shanghai Composite Index, lost 8.11 percent to 24.02, its lowest closing since recording a high of 48.62 yuan on its debut on Nov. 5. China Petroleum and Chemical Corp. (Sinopec) dropped 9.98 percent to 17.05 yuan.

Major lenders Industrial and Commercial Bank of China fell 6.23 percent to 6.62 yuan and Bank of China fell 6.87 percent to 5.56 yuan.

China Life and Ping An Insurance, the nation's two biggest life insurers, and Citic Securities, the nation's No. 1 listed brokerage, all fell by the daily limit.

Baoshan Iron and Steel, the country's largest steel producer, slid 6.59 percent to 15 yuan and China Vanke, the country's largest listed property developer, tumbled 5.37 percent to 25.55 yuan.

Weak U.S. dollar pushes Chinese yuan to record high

www.chinaview.cn 2008-01-28 12:29:34

BEIJING, Jan. 28 (Xinhua) --

The Chinese currency, the yuan, jumped to a new high of 7.1996 per U.S. dollar on Monday, despite a mild rebound of the dollar last Friday.

It was its fourth rise in as many trading days, and also the 11th time has hit new highs against the dollar since the beginning of this year.

The central parity rate of the yuan, also called the renminbi, was up 69 basis points overnight, the China Foreign Exchange Trading System reported.

The Chinese currency has continued to rise since the Federal Reserve slashed the benchmark federal funds rate by 75 basis points to 3.5 percent on Tuesday, in an emergency rate cut aimed at averting a U.S. recession.

Many investors expected a further interest rate cut when the Fed meets this week, although they lowered their expectations to a25 basis points cut from an earlier 50 basis points.

The dollar also remained weak despite the possibility of an economic stimulus plan of about 150 billion U.S. dollars to boost the economy by the U.S. government.

Analysts believed the high growth rate of the Chinese economy, which expanded by 11.4 percent in 2007, and the mounting inflation pressure also helped in driving the currency up.

Chinese officials announced last Thursday the country's December inflation rate remained high, at 6.5 percent, while the annual rate was pushed to 4.8 percent. Both were well above the government target of three percent.

Observers said they believed that the Chinese government would seek to allow the currency to appreciate faster to limit inflation.

The yuan has appreciated more than 12 percent since the peg to the U.S. dollar ended in July 2005.

The yuan also gained 793 basis points against the euro on Monday to report a rate of 10.56 yuan against one euro, as the euro fell against the U.S. dollar following news of a 7-billion-dollar fraud in French bank Societe Generale.

Editor: Yao Siyan

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