Markets unimpressed by central bank move to inject liquidity

Stocks in the Chinese mainland saw mixed fortunes Tuesday, despite an injection of liquidity by the central bank.

The benchmark Shanghai Composite Index fell 5.00 points or 0.23 percent to end at 2,128.86 points after rising by as much as 1.39 percent in the morning but sliding back in the afternoon.

The Shenzhen Component Index rose by 62.24 points or 0.75 percent to 8,398.92 points. The Shenzhen index also began with a jump in the morning but retreated in the afternoon.

Combined turnover on the two bourses on Tuesday was 246.9 billion yuan ($40.55 billion), up significantly from Monday's 169.59 billion yuan.

In the morning on Tuesday, as news surfaced that the Chinese government may pilot a preferred shares system in order to alleviate fundraising pressure, shares in banks and stock brokerages were boosted.

In the afternoon session, however, the morning gains were wiped away, with 70 stocks dropping by the daily limit of 10 percent and 1,300 stocks in the two bourses falling by more than 5 percent. By close of trading Tuesday, shares of 512 companies in the two exchanges had declined by more than 5 percent.

With sharp fluctuations throughout the day, shares in banks, insurers and brokerages rose, while papermaking, tourism, and the media sector were the biggest losers.

On Tuesday morning, the People's Bank of China, the central bank, resumed its open market operations, injecting seven-day reverse-repurchase agreements worth 13 billion yuan into the market.

But the move failed to halt the rise in the seven-day repurchase rate, which rose by 0.07 percentage points Tuesday to 5.0 percent, the highest since July 30.

ChiNext, China's NASDAQ-style board for high-tech and fast-growing start-ups listed in Shenzhen, fell by 1.36 percent from Monday, closing at 1,261.68 points on Tuesday.