Chinese share prices were sharply lower in Wednesday's morning
trade amid worries that strong inflation data for November may
prompt further economic tightening measures.
China's consumer price index, the major gauge of inflation, hit
the 11-year-high of 6.9 percent in November, up from 6.5 percent in
October, the National Bureau of Statistics said on Tuesday.
The benchmark Shanghai Composite Index, which covers both A and
B shares, plummeted 104.69 points, or 2.02 percent, to end in
morning trade at 5,070.39.
Banks and property developers led the decline. Investors dumped
the stocks after the People's Bank of China (PBOC) and China
Banking Regulatory Commission (CBRC) said in a notice on Tuesday
that commercial banks should define a "second home" according to
the property owned by the families of mortgage applicants rather
than the applicant alone.
The notice is a supplementary to the rule released by the PBOC
and the CBRC in September that raised mortgage deposits for
homebuyers who intend to buy a second apartment, a move to curb
speculation on property transactions. "Second" mortgage holders are
required to put a down payment of at least 40 percent and pay a
10-percent premium on their interest rate.
Shanghai Pudong Development Bank plunged 6.05 percent to 49.85
yuan, and heavyweight Industrial and Commercial Bank of China fell
3.05 percent to 7.96 yuan.
China Vanke, the nation's largest listed property developer,
dropped 4.64 percent to 30.80 yuan.
Wan Bing, an analyst with Guangfa Securities, said the overnight
sharp decline of Wall Street also dampened investors' sentiments in
China.
Overnight, the Dow Jones Industrial Average, fell 294.26 points,
or 2.14 percent, to 13,432.77 after the Federal Reserve cut
interest rate by a quarter percentage point, lower than the
expected half a percentage point.
(Xinhua News Agency December 12, 2007)
