CHINA MARKETS
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China Stock Turmoil 2015

China stocks choppy as investors await policy signals

Shanghai stocks end seesaw session with modest gains

PUBLISHED : Wednesday, 28 October, 2015, 5:51pm
UPDATED : Thursday, 29 October, 2015, 7:55pm

Mainland stocks bounced back on Thursday but trade was choppy, with traders turning their attention to the conclusion of a key Communist Party meeting in Beijing.

Hong Kong stocks reversed opening gains and closed modestly lower, with locally listed mainland financial stocks down heavily on weaker-than-expected earnings.

Shanghai stocks ended a seesaw session with modest gains, with the benchmark Shanghai Composite Index up 0.4 per cent to 3,387.32. The large-cap CSI 300 edged up 0.2 per cent to 3,533.31.

Turnover in Shanghai posted a significant drop to 295 billion yuan, compared with 362 billion yuan on Wednesday.

The Shenzhen Composite Index rose 0.8 per cent to 2,014.40, with the ChiNext Index up less than 0.1 per cent at 2,485.28.

Hong Kong retreated for the second day in a row, with the benchmark Hang Seng Index dropping 0.6 per cent to 22,819.94. The Hang Seng China Enterprises Index fell 1.1 per cent to 10,439.38.

This anticipation of the new policies and double guessing is one of the major causes of the ongoing swings in the market
Gerry Alfonso, Shenwan Hongyuan Securities

Turnover was HK$70.7 billion, up from Wednesday’s HK$61 billion.

Analysts said markets expected the party leadership to release a statement at the conclusion of a four-day Central Committee meeting in Beijing, with topics likely to include a cut to the mainland’s economic growth target and guidelines for development policies in the next five years.

“As the end of the plenum approaches, investors are becoming more active trying to guess the direction of the future policies,” said Gerry Alfonso, a director at Shanghai-based Shenwan Hongyuan Securities. “This anticipation of the new policies and double guessing is one of the major causes of the ongoing swings in the market.”

He added that markets received some support in late trading from some comments suggesting the mainland authorities would target annual GDP growth of 6.5 per cent.

In Hong Kong, stocks opened higher on a strong US lead, after the US Federal Reserve decided to keep interest rates unchanged but hinted at a December rate increase. But the index soon moved lower, led by a slump in mainland financial stocks.

China Life Insurance was the top decliner among blue-chip stocks, tumbling 5.4 per cent to HK$28.70, after its third-quarter net profit slid 74 per cent year on year, missing market forecasts by a wide margin. Rival New China Insurance skidded 4.8 per cent to HK$34.05, and Ping An Insurance lost 1 per cent to HK$43.60.

“The market clearly lacks strong catalysts to rise further, after positive sentiment from overnight Wall Street gains fizzled out,” said Louis Tse Ming-kwong, a director at VC Brokerage.

He also said traders were waiting for “key policy signals” from the party meeting in Beijing.