Shares of Chinese companies listed in the United States fell on Friday on concerns that China's central bank could raise interest rates during the upcoming long weekend. Chinese banking shares were the hardest hit due to uncertainties around a plan to restructure local government debt as well as concerns of further policy tightening by Beijing to contain racing inflation.
Under the plan, reported by Reuters on Tuesday, some banks will be forced to take losses on the bad debt. Many investors speculated that China's central bank could raise rates over the long weekend and as a severe drought and power shortage stoked fears of worsening inflation. Since it launched its monetary tightening cycle last October, the People's Bank of China has often picked holidays or weekends to surprise the market with tightening steps, such as hikes in interest rates or, much more often, increases in banks' reserve requirement ratio (RRR).
US-listed shares of China Life Insurance Co Ltd fell 1.8 percent to $50.86 and PetroChina lost 1.7 percent to $140.24. Baidu Inc shares also fell 1.7 percent to $136.18. The BNY Mellon index of leading American Depository Receipts (ADRs) was up 0.3 percent, but the BNY Mellon index of leading Asian ADRs dipped 0.2 percent, underperforming stocks from other regions.
The BNY Mellon index of leading European ADRs traded up 0.5 percent. Receipts with the BNY Mellon index of leading Latin American ADRs rose 0.7 percent. But the overall US stock market was down following the government's report that only 54,000 jobs were added in May - far less than even reduced expectations. This was the weakest reading since September for US non-farm payrolls growth, while the country's jobless rate rose to 9.1 percent in May from 9 percent in April.
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