Chinese stocks tumble to lowest since last year’s meltdown
China’s benchmark stock index closed below 3,000 on Wednesday, the lowest since last summer’s stock market meltdown, as better exports data and signs of a steadier yuan failed to prevent another round of sell-off.
The Shanghai Composite Index closed down 2.42 per cent at 2,949.60, the lowest since August 26, while the large-cap CSI300 lost 1.86 per cent to finish at 3,155.88.
The Shenzhen Composite Index shed 3.46 per cent to its worst close in three months while the Nasdaq-style ChiNext sank 4.09 per cent.
Louis Tse Ming-kwong, director of VC Brokerage, said he expects stocks to continue to fall for the rest of the week and blamed the day’s sell-down on anticipation of futures options in China expiring on the day, among other factors.
New data showed China’s trade volume fell 7 per cent year on year to 24.59 trillion yuan (HK$29 billion) in 2015, below the government’s 6 per cent target. But monthly trade data for December came in better than expected, with exports in yuan terms jumping 2.3 per cent year on year.
“The recent sell-off in mainland markets does not reflect any change in the fundamental economy,” said Brett McGonegal co-CEO of Reorient Group, citing last week’s aborted introduction of circuit breakers as well as the ongoing intervention in the foreign exchange markets as factors damaging sentiment.
Unlike in China, Hong Kong stocks closed higher on Wednesday. The key Hang Seng Index advanced 1.13 per cent to 19,934.88 while the H-share index tracking stocks of mainland Chinese companies edged up 0.65 per cent to 8,494.49.
The rebound in Hong Kong stocks comes after nearly two weeks of heavy losses and a series of extraordinary steps by Beijing, including putting the brakes on an ill-designed circuit breaker system.
Hong Kong investors have been rotating their holdings away from mainland Chinese companies and into Hong Kong-focused firms, said Ivan Li, equities analyst at Tung Shing Securities. He cited insurance giant AIA as a popular pick among his clients for its regional exposure. AIA shares rose 2.6 per cent to HK$43.1 on Wednesday.
Footwear retailer Walker Group leapt 35 per cent to HK$1.31 in Hong Kong after the company announced that its controlling shareholders were in talks to sell their 60.35 per cent stake for HK$1.23 apiece to China Consume Elderly Care, a Chinese pension fund service provider.
Hong Kong stocks will likely remain below the 20,000 level for the rest of the week as investors are still worried about the state of China’s economy and weak consumption, Tse said.
“Hong Kong technically is quite oversold. If you compare (Tuesday’s low) with the 250-day moving average...it’s around 18 per cent,” said Tse, referring to the average closing level in 250 days.
Tse added that investors will look to overseas market for clues on Hong Kong stocks in the coming days, particularly oil. Crude prices rebounded in Asian trade on Wednesday, after sliding below US$30 a barrel overnight for the first time in 12 years. WTI crude futures jumped 2.9 per cent to US$31.32 while Brent crude advanced 2.8 per cent to US$31.74.