New | Shanghai shares tumble in afternoon despite state media efforts to boost sentiment
A series of calming articles in the official mainland media failed to soothe market jitters yesterday as bourses went for another volatile ride, ending down for the second day running.
The Shanghai Composite Index reversed a midday 1.78 per cent rise to close down 1.62 per cent at 4,229.27. The CSI300 Index of the largest listed companies in Shanghai and Shenzhen dropped 0.95 per cent to 4,553, its lowest finish in more than two weeks.
Mainland markets have been on a tear with the main Shanghai index up more than 120 per cent since state media first played up stock investments last summer.
“People take government statements about the market very seriously,” said Tim Condon, head of financial markets research at ING.
Occasional notes of caution from mainland regulators, including warnings about buying stocks on borrowed money – a practice known as margin lending – have competed for investor attention alongside more upbeat pronouncements.
Xinhua News Agency yesterday reassured investors: “In the medium term, there’s adequate upward momentum, so market bullishness will continue. “Both regulators and stock investors hope to see steady and healthy development of the market.”
Mainland financial stocks reflected the swing in daily temperament, with banks broadly down while insurers rose on strong sales and reports that proposed health insurance reforms would include tax concessions.
A buoyant market was attractive for companies seeking to raise capital, Condon said, adding that he saw Beijing’s market boosting agenda as a means to rein in the shadow banking sector.
Now it wanted to temper “speculative excess”, he said.
Ping An Insurance shares closed up 2.82 per cent at 88.58 yuan in heavy trading, while the firm’s Hong Kong-listed equities rose 1.3 per cent to HK$108.70. China Life Insurance stock rose 6.08 per cent to 40.90 yuan.
“Life insurers’ sales are positively correlated to the market as their products are more attractive in rising markets as they have an equity upside,” Credit Suisse analyst Arjan van Veen said.
Hong Kong’s Hang Seng Index dipped 0.41 per cent, or 114.63 points, to 27,640.91 despite leaping more than 200 points in morning trading.
Property developers were among the biggest fallers, with Wharf down 2.32 per cent at HK$56.85. It was the firm’s second day in negative territory after news that mainland developers Sunac and Greentown, in which Wharf is a major investor, were ending a strategic partnership.
Shares of Hans Energy, which had been engaged in a protracted legal dispute with China Petroleum & Chemical (Sinopec) over a 20-year fuel storage contract, were one of yesterday’s biggest movers. The stock finished up 27.27 per cent at 35 HK cents after Hans, controlled by mainland businessman David An, said a settlement had been reached with Sinopec giving
