Industrial and Commercial Bank of China Ltd. led a gauge of financial shares to its lowest level in six months. China Shenhua Energy Co. sank 2.1 percent to the lowest level since October 2008.
The Shanghai Composite Index lost 1 percent to 1,939.84 as of 9:44 a.m. local time, heading for its sixth day of declines. The CSI 300 Index slid 0.5 percent. The gauge entered a bear market on June 24 after the People’s Bank of China signaled it will maintain efforts to curb speculative lending.
One-year interest-rate swaps based on China’s seven-day repurchase rate retreated 33 basis points to 3.75 percent after the People’s Bank of China said it will use tools to ensure money-market stability and that the cash crunch will abate. The contract touched a record 5.06 percent June 20.
“The concern about the impact of the cash crunch on the real economy still lingers among investors and the government’s deleveraging among the financial system isn’t likely to come to an end after the capital injection,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The capital injection simply eases the market sentiment.”
--Zhang Shidong. Editors: Chan Tien Hin, Matthew Oakley
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