Chinese shares close lower Friday

Chinese shares closed lower on Friday over worries of a possible cash crunch, despite an announcement stating that a major state-owned investment company will buy more A-shares. The benchmark Shanghai Composite Index lost 0.52 percent, or 10.93 points, to end at 2,073.10. The Shenzhen Component Index shrank 0.14 percent, or 11.44 points, to 8,136.05. Combined turnover on the Shanghai and Shenzhen bourses slightly shrank to 143.73 billion yuan (23.26 billion U.S. dollars) from 147.49 billion yuan on the previous trading day. The 21st Century Business Herald said on its official microblog account that the Bank of China (BOC) had defaulted on Thursday afternoon, deferring transactions for half an hour due to a fund shortage, citing anonymous sources. The BOC responded that it has never experienced a monetary default and had completed all outbound payments in a timely fashion on Thursday. The Shanghai Interbank Offered Rate (SHIBOR) overnight rate, a basic gauge of interbank borrowing costs, dived on Friday after hitting a record-high of 13.44 percent on Thursday. Government-owned investment company Central Huijin Investment Ltd. said Thursday that it will purchase more A-shares from six Chinese financial institutions over the next six months. Boosted by Central Huijin's move, the financial sector climbed by 0.88 percent on Friday, with New China Life Insurance Co., Ltd. up 8.77 percent to 24.81 yuan per share.