SHANGHAI, March 28 China stocks fell on Tuesday
on concerns about tightening liquidity conditions after the
central bank refrained from injecting short-term funds into the
banking system for the third session in a row.
The blue-chip CSI300 index fell 0.2 percent to
3,469.81 points, while the Shanghai Composite Index lost
0.4 percent to 3,252.95.
The People's Bank of China (PBOC) skipped open market
operations again on Tuesday, saying liquidity levels in the
banking system were "appropriate" and there was no reason to
inject more funds.
Interbank borrowing costs remained elevated, however, with
the Shanghai Interbank Offered Rate (SHIBOR) for the seven-day
tenor at 2.7910 percent, around its highest level
Adding to the usual concerns about tighter liquidity heading
into the month- and quarter-end, some lenders are believed to be
hoarding cash ahead of the central bank's quarterly assessment
of the health of commercial banks. (For a factbox on the risk
assessment report and its possible impact on banks and markets,
The PBOC's decision to withhold funds is reinforcing
expectations it will gradually tighten monetary policy this year
as it looks to reduce risks in the financial system and
encourage more deleveraging. It has nudged up money market and
short-term rates several times already this year.
For China's stock market investors, concerns about the
impact of further tightening have overshadowed a raft of upbeat
economic data, including robust industrial profits released on
"In the short term, neither bulls nor bears can get the
upper hand," Min Lizheng, analyst at Eastmoney Securities wrote.
The government must balance the need to support the economy
and ward off asset price bubbles, Min said.
Investors pulled out from smaller-caps, with newly-listed
stocks the worst hit, as the securities regulator vowed to step
up a crackdown on speculation or manipulation by issuing large
amounts of bonus shares instead of paying out cash dividends.
Most sectors lost ground, dragged down by financial
and infrastructure stocks.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Kim