China’s stocks declined the most in seven weeks, led by financial companies and commodity producers, after an unexpected shift by the central bank to restrain lending spurred concern that higher interest rates will follow.
The Shanghai 300 Composite Index stumbled 113.77 points, or 3.2%, to 3,421.14.
Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, plunged the most since October 2008 and Poly Real Estate Group Co. slumped 4.1%. The People’s Bank of China raised yesterday the proportion of deposits that banks must set aside as reserves by 50 basis points starting Jan. 18. Jiangxi Copper Co. dropped 5.6% on concern tighter credit will sap demand for commodities.
Industrial & Commercial Bank of China dropped 4.7% to 5.09 yuan. China Construction Bank Corp., the country’s second-largest bank, retreated 5% to 5.86 yuan, the steepest decline since Aug. 31.
Economists hadn’t anticipated the move to increase the reserve ratio until at least April, the median of 11 forecasts in a Bloomberg News survey showed last week. The existing reserve-ratio level for big banks is 15.5 percent, and 13.5 percent for smaller banks.
China began reducing banks’ reserve requirements in September 2008 from a high of 17.5% as the global financial crisis deepened, part of a monetary loosening that included the biggest single interest-rate cut since the 1997-98 Asian financial crisis.
China is likely to raise benchmark interest rates by 27 basis points before the Lunar New Year on February 14
In Tokyo, the Nikkei 225 Index slumped 144.11 points or 1.3% to 10,735.03.
Komatsu Ltd., which counts China as its fastest-growing market, dropped 2.9%. Mitsubishi Corp., Japan’s biggest commodities trader, retreated 3.6% after prices of oil and metals slid. Canon Inc., the world’s largest maker of cameras and which gets about 80% of its revenue outside Japan, lost 2.7%.
Steelmakers dropped after Credit Suisse Group AG cut its rating on the industry. Japan Airlines Corp., Asia’s biggest carrier, plummeted on bankruptcy concerns as trading volume of its shares set a Tokyo Stock Exchange record.
Mitsui & Co. fell 3.7%. Inpex Corp., Japan’s largest oil-exploration company, dipped 2.1%.
Hong Kong’s Hang Seng Index collapsed 578.04 points, or 2.6%, to 22,326.64.
Elsewhere:
Korea’s Kospi Index was 27.23 points, or 1.6%, lower to 1,671.41
Taiwan’s Taiex index slipped 112.81 points, or 1.4%, to 8,196.56
Singapore’s Straits Times index subtracted 27.73 points, or 1%, to 2,888.38
New Zealand’s NZX Index slid 14.10 points, or 0.4%, to 3,276.20
Australia’s S&P/ASX 200 retreated 31.40 points, or 0.6%, to 4,868.10.
