TIK: China Indexes Drop 2.5%; China Seeks Price Stablility
Stocks in Shanghai and Hong Kong declined and crude oil futures surged as tensions flare up in the Middle East and North Africa. A rating agency downgraded Japan’s sovereign debt outlook. Beijing also reiterated its pledge to keep retail prices of fuel in control after a price hike of as much as 5% this week.
Foreign oil companies have begun to evacuate its non-essential staff from Libya as Col. Muammar Gaddafi’s grip on power is weakening and people take control of Benghazi, second largest city in Libya.
Crude oil futures surged $5.22 a barrel to close at $90.22 and the yen traded at 82.88 to a dollar.
The Shanghai Composite Index dropped 2.6% to 2,855.52 and the Shenzhen Composite index dropped 2.7% to 1,262.82. Hang Seng Index declined 2.1% or 494.61 to 22,990.81.
China’s top decision making body said that prices stability is the main aim of the nation sparking fears that more rate tightening or hikes in bank reserves may be carried out.
Sinopec is scheduled on Friday to complete its $3.5 billion or 23 billion yuan convertible bond offering. The offering also drained liquidity from stocks as investors bid up the subscription.
Stock Movers
Brokerage stocks closed lower after gaining sharply in the last two weeks of trading.
Hong Yuan Securities declined 5.2% to 17.42 yuan after the brokerage firm confirmed that it will raise as much as 7 billion yuan in a private placement.
Citic Securities declined 4.5% to 13.53 yuan and Industrial Securities fell 6.5% to 16.45 yuan.
Banks closed lower on the worries that more rate tightening may be announced earlier than expected. Industrial Bank declined 4.3% to 25.64 yuan and China Merchants Bank dropped 2.8% to 12.72 yuan.
Airlines declined sharply after crude oil futures soared the most in several years in a day.
China Southern Airlines Co declined 5.2% to 8.71 yuan and Air China Ltd fell 5.1% to 11.79 and China Eastern Airlines Corp dropped 4.9% to 6.54 yuan.
Alibaba.com Ltd plunged 8.6% to HK$15.24 after the company said chief executive and other senior executives resigned on a “systemic breakdown” in operations that permitted the listing of more than 2,300 fraudulent suppliers.
