BEIJING -- Monday kicked off on a slightly down note in Hong Kong, with the Hang Seng Index losing 0.5% to 15,769. But the Shanghai Composite Index managed to shake off news of new monetary measures in China to add 0.8%, closing at 1586.
In Friday New York trading, China shares were mixed to slightly down. Tom Online (TOMO) fell 1.55% to $19, and Sina (SINA - Get Report) was off 3.3% to $22.91. Gainers included Ctrip (CTRP - Get Report), up 0.7% to $49.07, and Elong (LONG - Get Report), advancing 1% to $14.18.
Over the past week, a raft of new data showed economic growth in China careening along at too rapid a clip, prompting much concern about how Beijing would respond.
The wait didn't take long. After the Asian markets closed Friday, China's central bank announced it would hike banks' reserve requirement ratio from 7.5% to 8%, starting July 5.But in a quieter move with potentially far greater long-term impact, mainland policymakers have also begun allowing the Chinese currency to appreciate noticeably against the dollar. Friday, the dollar fell to the lowest level against the yuan since Beijing undertook a one-off, 2.1% upward currency revaluation last summer. Authorities allowed the yuan to open below 8 to the dollar -- a recent psychological benchmark -- last Thursday and Friday. Viewed another way, at its low in Friday trading, the dollar could have bought only 7.9970 yuan. "The drop below 8 sends a very strong message that the government will allow the currency to appreciate. Going forward, we believe the currency will appreciate faster," said Qing Wang, senior currency strategist for Bank of America in Hong Kong. In late Monday trading, the dollar was at 8.0060 yuan. Granted, nobody expects any huge moves upward in the future. "It's going to be a gradual and smooth process, with appreciation accelerating instead of another revaluation," said one analyst in Hong Kong.