SHANGHAI, CHINA

Chinese shares fell to a 14-month low Tuesday on liquidity jitters ahead of a state-owned bank’s huge share sale and a government review of bank lending.

The benchmark Shanghai Composite Index plummeted 108.22 points, or 4.3 per cent, to close at 2,427.05, the lowest since April 28, 2009. The Shenzhen Composite Index for China’s smaller second exchange dived 5.4 per cent to 957.84.

The market fell for a fifth day after Agricultural Bank announced pricing for an initial public offering that is expected to raise US$23.2 billion. Investors worry that will draw money from other stocks and depress the market.

Liquidity fell as banks prepared for a government review of whether they meet minimum deposit levels to support their outstanding loans for the six-month period ending Wednesday, analysts said.

“The market is facing huge pressure on liquidity. It fell rapidly after a sluggish week because not much new capital is flowing in,” said Zhang Fan, analyst at Debon Securities in Shanghai.

China Construction Bank Ltd. declined by 3.5 per cent to 7.47 yuan. Industrial & Commercial Bank of China Ltd., China’s biggest commercial lender, dropped 2.6 per cent to 5.74 yuan, while Bank of China Ltd. shed 2.3 per cent to 3.47 yuan.

Jiangxi Copper Ltd., China’s biggest metal producer, tumbled 7 per cent to 25.52 yuan, while PetroChina Ltd., Asia’s biggest oil and gas producer, fell 3.7 per cent to 10.28 yuan.

Poly Real Estate Group tanked seven per cent to 10.64 yuan, while China Vanke Ltd, the country’s biggest developer, gave up 3.8 per cent to 6.85 yuan.

In currency markets, the yuan weakened to 6.7948 to the US dollar, down from Monday’s close of 6.7937.

-AP

An investor looks at a computer screen showing stock index at a brokerage in Beijing yesterday. Chinese shares fell to a 14-month low yesterday on liquidity jitters ahead of a state-owned bank’s huge share sale and a government review of bank lending. (Photo: AP)