SHANGHAI Feb 3 China stocks snapped a five-day
winning streak on Friday after Beijing unexpectedly raised
short-term interest rates on the first trading day after the
Lunar New Year holiday, in a further sign it has moved to a
tightening policy bias.
The blue-chip CSI300 index ended down 0.7 percent
at 3,365.12 points, while the Shanghai Composite Index
lost 0.6 percent to 3,140.65.
The People's Bank of China raised the interest rates on open
market operations by 10 basis points on Friday morning,
reinforcing views that Beijing is opting for a "prudent and
neutral" monetary policy stance this year.
It also raised rates on short-term lending facility (SLF)
"The move has some impact (in the stock market). First, it
directly affects money market rates, and also it raised the
expectation for further tightening," said Zhang Qi, analyst at
Haitong Securities, noting that declining bond prices hurt
insurers' balance sheets.
Market attention was also on Xiao Jianhua, the missing
Chinese-born billionaire behind Tomorrow Group. The tycoon may
have been abducted by Chinese agents, according to some media
Shares in companies directly or indirectly controlled by
Tomorrow Group slumped - Xishui Strong Year Co Ltd Inner
Mongolia and Baotou Huazi Industry Co Ltd
both tumbled 10 percent at the close, the maximum
Nearly all sectors in China's mainland markets retreated.
(Reporting by Jackie Cai and John Ruwitch; Editing by Kim