China stocks dive 3 pct after bank reserve hike

China stocks dive 3 pct after bank reserve hike
Written by Reuters
Monday, 17 January 2011 14:52

SHANGHAI: Chinese shares fell more than 3 percent on Monday afternoon, Jan 17, led by banking and property stocks, after a rise in lenders' reserve requirements and talk of a property tax in Shanghai kept bank and developer stocks under pressure.

The benchmark Shanghai Composite Index fell to 2,704.5 points by 0640 GMT, dropping far below the crucial 125-day moving average at 2,779. The index lost 1.7 percent last week amid lingering fears over monetary tightening steps.

The property sub-index fell 5.7 percent.

The PBOC announced a 50-basis-point RRR hike for all banks after Chinese markets closed last Friday, which will take effect on Thursday and will drain an estimated 360 billion yuan ($55 billion) from the market.

Shanghai's mayor said on Sunday that one of the city's main tasks this year would be to prepare for the trial run of a property tax to curb speculative investments in the real estate sector.

Top lender ICBC dropped 3.9 percent, while the biggest listed property developer China Vanke tumbled 7.7 percent. - Reuters