Shanghai, Hong Kong stocks end lower, weighed by weakness in the commodity complex, soft China trade data

PUBLISHED : Wednesday, 09 March, 2016, 9:12am
UPDATED : Wednesday, 09 March, 2016, 6:16pm

Mainland Chinese ended lower on Wednesday, breaking a six-day bull streak, as miners and energy shares dragged down the benchmark index, after commodity prices slumped overnight and China’s February trade data surprised to the downside on Tuesday.

The Shanghai Composite Index opened lower and briefly tumbled more than 3 per cent, before paring the loss to close 1.3 per cent lower, or 38.83 points down, at 2,862.56.

The large company CSI300 Index dropped 1.2 per cent or 35.76 points to 3,071.91. The Shenzhen Composite Index declined 2.1 per cent or 37.09 points to 1,713.44. The Nasdaq-style ChiNext Index fell 1.6 per cent or 31.38 points to 1,970.81.

Turnover for Shanghai and Shenzhen markets shrank to 427 billion yuan (HK$509 billion) from 533 billion yuan on Tuesday.

In Hong Kong, the Hang Seng Index recovered most of its early losses to end 0.1 per cent lower, shedding 15.32 points to close at 19,996.26. Index heavyweight HSBC Holdings rose 1.6 per cent to settle at HK$50.05.

The Hang Seng China Enterprises Index lost 0.8 per cent or 63.74 points to 8,441.48.

In mainland markets, banks and insurers rallied in late trading on suspected buying by state-backed funds, but failed to push the benchmark index into positive territory, as miners and energy shares were pressured after a slide in commodity prices and worse-than-expected trade data from China.

On Tuesday, China’s customs authority reported that exports in US dollar terms decreased 25.4 per cent year-on-year in February, the worst fall since May 2009. Imports for the month fell 13.8 per cent from a year earlier, reflecting a more severe contraction than expected.

Overnight, the US and global oil benchmarks both settled sharply lower, with the West Texas Intermediate crude down 3.7 per cent and the Brent crude off 2.9 per cent. Copper, nickel and aluminium also tumbled.

Louis Tse Ming-kwong, director of VC Brokerage, said the disappointing Chinese trade data has dragged on global equities and commodities.

“All the economic data [from China] was much worse than expected. Even with the decline of the yuan, it still didn’t help exports. Last night, the US was down as well as other global markets. Hong Kong just followed suit,” said Tse, adding that the decline in China’s imports means domestic mainland consumption remains weak.

Among Shanghai’s worst performers, Jiangxi Copper plunged 7.5 per cent to 14.5 yuan, Angang Steel sank 6.2 per cent to 4.11 yuan, and Chongqing Iron & Steel fell 5.8 per cent to 2.78 yuan. Yanzhou Coal Mining dived 9.1 per cent to 9.95 yuan, and China Coal Energy Company lost 5.4 per cent to 5.12 yuan.

Some banks and insurers managed to shake off losses and close in positive territory. ICBC advanced 1.6 per cent to 4.4 yuan, Bank of China gained 0.9 per cent at 3.43 yuan, China Merchants Bank rose 0.5 per cent to 16.04 yuan, and Ping An Insurance tacked on 0.3 per cent at 31.39 yuan.

Analysts said investors are eagerly waiting for the European Central Bank meeting on Thursday for policy clues.

“The ECB could show some imagination this coming Thursday,” said Guillaume Rigeade, a fund manager at Edmond de Rothschild Asset Management.

He believes the ECB will “boost its bond-buying programme” by extending their duration and increasing monthly purchases or widening the investment scope, in a bid to reduce the borrowing costs for companies and individuals.