Shanghai key index drops to 8-month low on Mon

Shanghai key index dived to an eight-month low on Monday in fears of the imminent introduction of further tightening monetary policies.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, slumped 3.60% or 142.63 to 3,820.05 points after fluctuating between 3,941.26 and 3,813 points.

Similarly, the Shenzhen Component Index on the smaller Shenzhen Stock Exchange plunged 4.40% to 13,207.78 points, after touching an intraday low of 13,176.87 points.

The combined turnover on the two bourses expanded slightly to RMB 107.6 billion from RMB 93 billion of the previous trading day.

Zhou Xiaochuan, governor of China's central bank reiterated that there is room to raise interest rate and bank reserve after CPI hit new 11-year high of 8.7% in February.

Industrial & Commercial Bank of China Ltd<601398><1398>, the country's biggest lender, dropped for the fourth day by 3.14% to RMB 5.56. China Construction Bank Corp<601939><939>, the country's second-largest lender, fell 1.53% to RMB 7.07.

China Petroleum & Chemical Corp (Sinopec)<600028><386>, Asia's biggest oil refiner, continued to drop yesterday after crude oil prices kept rising. Its shares lost 2.81% to finish at RMB 13.51. Air China<601111><753>, the country's biggest carrier by market size, slumped 7.70% to RMB 14.62. China Southern Airlines<600029><1055> sank 9.16% to RMB 13.99, while Shanghai-based China Eastern Airlines<600115><670> slumped 9.97% to RMB 11.02.

Among the top 10 heavyweights, only PetroChina<601857><857>, the nation's biggest oil producer, broke the dropping trend to gain. It was up 1.25% or RMB 0.28 to RMB 22.61.

As a whole, losers outweighed winners by 821 to 23 in Shanghai and 656 to 10 in Shenzhen.