2014.06.2702:06:26UTC+00Chinese stocks decline on poor bank performance

Chinese stocks are down following a poor performance on the financial and consumer-staples sector with the benchmark index’s gains this week diminishing.

The Shanghai Composite Index declined by 0.5% to 2,019.32, 9:47 am, China time, with an overall 0.1% gain for the week. Yesterday, China’s benchmark money-market rate increased 42 basis points, surging to a seven-week high. Last week, banks met quarter-end regulatory limits as cash balances increased.

The Bank of China Ltd. traded without dividend driving a 1.3% drop in its shares. More than half of the index’s losses is attributed to the bank’s losses. Feitian Technologies, Longda Meat Foodstuff Co. and Wui Xuelang Environmental Technology Co. extended the 44% surge yesterday for their trading debut and increased at least 10%. Government reports indicated an 8.9% gain in May’s industrial profits versus the 9.6% increase last April.

Analyst at Everbright Securities Co., Zeng Xianzhao commented that there is still an underlying concern about tightening of liquidity as the month comes to a close. He added that the new IPOs are arousing speculations from market participants.

Chinese IPOs boost an average of 43% in the first 2 months of 2014 with pressures from securities regulator weighing in on companies to appraise tradings at below-average valuations.