Ratio hike may hurt sentiment

SHANGHAI: The central bank's latest move to raise the reserve requirement ratio by 100 basis points is expected to dampen stock investors' sentiment as it indicates a possible consistent tightening monetary policy in the coming months.

The hike, announced on Saturday, has to some extent reversed investors' previous expectation of let-up in tightening measures due to the possible slowing of CPI growth for May. The CPI number is due to be released on Thursday, and analysts widely expect it to be below 8 percent.

The major indicator, Shanghai Composite Index, fell 7 percent in May, and slid 3 percent in the first week of June. The continuous shrinking turnover shows the wait-and-see attitude among investors, as uncertainties still cloud China's economy.