Falling FDI weighs on Shanghai stocks

Shanghai stocks retreated this morning after data showed China's foreign direct investment shrank eight months in a row in January.

The benchmark Shanghai Composite Index shed 0.07 percent to 2,381.20 points. Turnover was 52 billion yuan (US$8.4 billion) at midday.

China attracted US$9.27 billion of foreign direct investment in January, falling 7.3 percent from a year earlier. The decline accelerated from December's fall of 4.5 percent, shrinking for the eighth straight month.

Everbright Securities said the index also fell on market corrections, but the foundation for upward movement remains firm.

"The stock market is likely to rise further on improving corporate earnings as the economic recovery is expected to continue in the first half of this year," the broker said.

Lenders declined among financial stocks on speculation the government may increase borrowing costs for second-home buyers.

China Minsheng Banking Corp slipped 2.3 percent to 10.30 yuan. Shanghai Pudong Development Bank dropped 3.3 percent to 10.73 yuan. China Merchants Bank lost 2.2 percent to 13.52 yuan.

Cement producers also fell. Anhui Conch Cement Co, China's biggest cement producer, shed 1.3 percent to 19.47 yuan. Gansu Qilianshan Cement Group decreased 1.3 percent to 11.23 yuan. Shaanxi Qinling Cement Group lost 1.4 percent to 6.56 yuan.