China stocks dive 3% on bank reserve hike

Chinese shares fell more than 3 pct on Monday afternoon,led by banking and property stocks.

Chinese shares fell more than 3 per cent on Monday afternoon,led by banking and property stocks,after a rise in lenders’ reserve requirements and talk of a property tax in Shanghai kept bank and developer stocks under pressure.

The benchmark Shanghai Composite Index fell to 2,704.5 points by 0640 GMT,dropping far below the crucial 125-day moving average at 2,779. The index lost 1.7 per cent last week amid lingering fears over monetary tightening steps.

The property sub-index fell 5.7 per cent.

The PBOC announced a 50-basis-point RRR hike for all banks after Chinese markets closed last Friday,which will take effect on Thursday and will drain an estimated 360 billion yuan ($55 billion) from the market.

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Shanghai’s mayor said on Sunday that one of the city’s main tasks this year would be to prepare for the trial run of a property tax to curb speculative investments in the real estate sector.

Top lender ICBC dropped 3.9 per cent,while the biggest listed property developer China Vanke tumbled 7.7 per cent.