China stocks end lower, weighed by losses in commodities producers

Shanghai Composite eases 2.52 points to 3,287.7; Hong Kong markets closed for the day as Typhoon Hato sweeps through city

PUBLISHED : Wednesday, 23 August, 2017, 10:32am
UPDATED : Wednesday, 23 August, 2017, 10:31pm

Chinese stocks retreated for the first time in five trading days on Wednesday as raw-material producers slid amid tumbles in futures contracts from steel to coking coal.

The Shanghai Composite Index slid 0.08 per cent, or 2.52 points, to 3,287.7, ending a four-day, 1.4 per cent rally. Trading volumes on the Shanghai exchange were 15 per cent below the 30-day average. The CSI 300 Index of large companies recovered earlier losses and edged up 0.1 per cent, or 3.8 points, to 3,756.

Hong Kong cancelled the day’s stock and futures trading as Typhoon Hato wrecked havoc on the city.

Steel rebar futures sank 2.6 per cent in Shanghai and coking coal contracts tumbled 2.9 per cent on the Dalian Commodity Exchange on concern the government will step up measures to cool a surge in industrial metals prices. Steel and coking coal futures have advanced at least 24 per cent this year.

“The rally on commodity stocks will take a breather here,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “The current slow pace of economic growth doesn’t support further gains in commodity prices.”

Stocks also fell as investors turned more cautious, with the Shanghai Composite moving close to the 3,300-point level considered as a key technical resistance zone, Dai said.

The benchmark has failed twice to breach that level since December.

A gauge tracking material stocks fell 1.8 per cent to become the worst performer among the CSI 300’s 10 industry groups. The sub-index had advanced 24 per cent over the past three months through Tuesday as a government-led cutback in excessive capacity boosts raw-material prices from steel to aluminium.

Baoshan Iron & steel fell 3.7 per cent to 7.9 yuan, paring its gain to 25 per cent this year. Aluminum Corp of China dropped 4.2 per cent to 7 yuan and Jiangxi Copper lost 3.7 per cent to 18 yuan.

Great Wall Motor retreated 1.6 per cent to 13 yuan as the stock resumed trading after being suspended on Tuesday. The company has not negotiated with Fiat Chrysler Automobiles or signed any written document, the automaker said in an exchange filing, clarifying media reports that it had been in talks to buy Fiat’s Jeep unit.

In Asian trading elsewhere, Japan’s Nikkei 225 gained 0.3 per cent and South Korea’s Kospi added 0.1 per cent. Asia’s stock markets got a boost from strength in US equities overnight.

The S&P 500 Index jumped 1 per cent for the biggest gain in a week on optimism the Trump administration is gaining momentum in its efforts to reform the tax code.