China’s stocks fell, with the benchmark index posting longest losing streak in almost two decades, as targeted fund injections by the central bank failed to alleviate the worst cash crunch since June.
China Construction Bank Corp. sank 6.2 percent after touching its lowest level in almost five years. China Everbright Bank Co. slid 4 percent in its debut in Hong Kong. Ping An Insurance (Group) Co. dropped 4.7 percent. The People’s Bank of China conducted short-term liquidity operations recently, it said on its microblog yesterday, without giving details of the recipients, amount or rate charged.
The Shanghai Composite Index dropped 2 percent to 2,084.79 at the close in a ninth straight day of losses and capping a 5.1 percent weekly decline. The seven-day repurchase rate, a gauge of liquidity in the financial system, increased 100 basis points to 7.60 percent, according to a daily fixing by the National Interbank Funding Center. It jumped 328 basis points this week, the most since January 2011.
“The central bank said they have released funds but that could be just a short-term thing,” said Xu Shengjun, analyst at Jianghai Securities Co. “It’s not convincing to investors if this will help with tightening liquidity in the market” with initial public offerings resuming in January, he said. IPOs have been halted since October 2012.
The CSI 300 Index slid 2.3 percent to 2,278.14, while the Hang Seng China Enterprises Index lost 1.5 percent. The Bloomberg China-US Index dropped 1.5 percent yesterday. Trading volumes in the Shanghai index were 19 percent lower than the 30-day average.
A gauge of financial companies in the CSI 300 fell 2.3 percent to the lowest level in a month. China Construction Bank plunged to 3.96 yuan. Ping An Insurance retreated to 38.97 yuan in its biggest loss since June 24. Poly Real Estate Group Co. lost 3.8 percent to 8.08 yuan.
China Everbright Bank fell to HK$3.96 in Hong Kong after the lender raised $3 billion in the city’s biggest first-time share sale this year to strengthen capital buffers.
The monetary authority injected 200 billion yuan ($32.9 billion), online financial news provider Netease reported, citing a person it didn’t identify. The central bank said it would continue to offer funding support through short-term liquidity tools to qualified financial institutions, depending on the situation.
The one-year interest-rate swap that exchanges fixed payments for the seven-day repo increased seven basis points to 5.04 percent, according to data compiled by Bloomberg. It has jumped 107 basis points this quarter and touched 5.07 percent yesterday, the highest in Bloomberg data going back to 2006.
“What the central bank has done does not appear enough,” Tao Wang, economist at UBS AG, wrote in a note to clients. “While we do not expect the current elevated levels in market rates to last, we do expect volatility to continue in China’s money market for at least another couple of weeks.”
A gauge of material companies in the CSI 300 slid 3 percent. Aluminum Corp. of China Ltd., known as Chalco, dropped 2.5 percent to 3.56 yuan. Shandong Gold Mining Co. plunged 5 percent to 17.43 yuan to its lowest level since March 2009.