Shanghai shares fell yesterday on concerns about tightening liquidity conditions after the central bank refrained from injecting short-term funds into the banking system for the third straight session.
The Shanghai Composite Index shed 0.43 percent to 3,252.96 points.
The People's Bank of China suspended reverse repurchase agreements operations again yesterday when reverse repos totaling 70 billion yuan (.2 billion) were due. The central bank said liquidity levels in the banking system were “appropriate” and there was no reason to inject more funds.
The PBOC has nudged up money market and short-term rates several times already this year as it looks to reduce risks in the financial system and encourage more deleveraging.
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.