Chinese stocks plunge as rate cut fails to materialise

November 24th, 2008 - 6:19 pm ICT by IANS  

Beijing, Nov 24 (Xinhua) China’s benchmark stock index finished 3.67 percent lower Monday, declining for a third straight day after an expected lending rate cut failed to materialize over the weekend. The key Shanghai Composite Index opened 0.42 percent lower before briefly entering positive territory minutes into the morning trade. But weak buying interest and profit-taking drove it to close 72.33 points lower at 1,897.06.

The smaller Shenzhen Component Index dropped 245.15 points, or 3.65 percent, to 6,466.19.

Losers outnumbered gainers by 764 to 101 in Shanghai and by 638 to 92 in Shenzhen. Combined turnover fell to 79.8 billion yuan from Friday’s 121.4 billion yuan.

On Friday, the Shanghai index tumbled as much as 4.6 percent before the expectation of a sharp interest rate cut over the weekend helped pare losses to 0.72 percent.

According to China’s Guosen Securities, the sell-off came after the expected rate cut failed to happen. The market would be volatile in the short term, but there was a good chance it could extend rebound in the coming week, the firm said in a research note Monday.

The government’s fiscal stimulus measures and easing of monetary policy could help improve economic fundamentals and boost liquidity that are key to a market rebound, it added.

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