China shares drop after bank reserve hike

China's main stock index opened down 0.5 per cent today after the central bank surprised the market with a rise in banks' reserve requirement ratio (RRR) after the market closed yesterday.

The benchmark Shanghai Composite Index opened at 2717.7 points after it closed up 1.1 per cent on Tuesday following data showing annual consumer inflation at 5.5 per cent in May, a 30-month high but within market expectations.

China's main property index dropped 0.6 per cent after S&P revised the outlook for China's property developers to negative.

In a move to help fight high inflation, the People's Bank of China announced a 50 basis-point RRR increase to take effect next Monday, its sixth such move this year, forcing big banks to put aside a record high 21.5 per cent of their deposits as required reserves.