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China stock market

China market rebound falters as benchmark index falls for third straight day

The Shanghai Composite Index has posted a three-day 1.4pc, erasing more than a third of the gain on the gauge since rebound began

PUBLISHED : Tuesday, 17 July, 2018, 5:22pm
UPDATED : Tuesday, 17 July, 2018, 10:03pm

China’s stocks dropped for a third straight day, jeopardising a week-long rebound since the benchmark gauge entered a bear market last month, as dimming prospects of economic growth and a trade friction with the US shook investors’ confidence.

The Shanghai Composite Index slid 0.6 per cent on Tuesday, posting a three-day 1.4 per cent loss. The losing streak erased more than a third of the gain on the gauge since the rebound on equities started almost two weeks ago. Energy and material producers led the decline on the broader market. Hong Kong’s Hang Seng Index dropped to the lowest in almost nine months.

The sell-off of mainland Chinese equities resumed after official data released on Monday showed that economic expansion had slowed in the second quarter and the trade spat bore no sign of ending soon. Brokerages including Shenwan Hongyuan Group said China’s economy was facing further downside risk for the rest of the year and policymakers would take measures including cutting banks’ reserve requirement ratios and increasing their loan quotas to counter slowdown.

There’s a lack of confidence among investors and they do very short-term trading rather than hold stocks for long
Wei Wei, Huaxi Securities

“There’s a lack of confidence among investors and they do very short-term trading rather than hold stocks for long,” said Wei Wei, a trader at Huaxi Securities in Shanghai.

“They are not optimistic about the market outlook and believe that there’s a bleak outlook of the economy and the trade war will persist for quite a long time.”

The Shanghai Composite lost 15.92 points to 2,798.13 at the close. It remains down 21 per cent from a high in January, exceeding a 20 per cent decline that is often seen by technical analysts as a start of the bear market.

Oil and coal producers retreated after crude oil futures traded near the lowest level in three weeks in New York. PetroChina, the nation’s biggest oil producer, dropped 2.5 per cent to 7.30 yuan. China Petroleum and Chemical, also known as Sinopec, shed 2.1 per cent to 6.20 yuan. Yanzhou Coal Mining sank 3.3 per cent to 11.50 yuan and Shaanxi Coal Industry slid 2.3 per cent to 7.39 yuan.

Pharmaceutical and consumer-staples companies, the best-performing sector this year, also fell. Shede Spirits slid 3.5 per cent to 33.91 yuan and Anhui Gujing Distillery slumped 3 per cent to 96.95 yuan. Changsheng Bio-technology tumbled by the 10 per cent daily limit for a second day to 19.89 yuan as the company received an inquiry letter from the Shenzhen exchange after it was ordered by the local drug administration to halt production of rabies vaccine for falsifying records.

Chicken-farming stocks jumped on optimism that the low inventory of baby chicks will drive up prices. Shandong Xiantan surged 10 per cent to 14.69 yuan and Shandong Yisheng Livestock and Poultry Breeding also jumped 10 per cent to 21.80 yuan.

In Hong Kong, the Hang Seng Index retreated 1.3 per cent, or 357.98 points, to 28,181.68, the lowest close since October 2017. The Hang Seng China Enterprises Index, or the H-share gauge, slid 1.1 per cent. Sunny Optical Technology Group was the worst performer on the benchmark, with the stock tumbling 6.8 per cent to HK$142. Hengan International Group sank 3.9 per cent to HK$71.90 and CSPC Pharmaceutical Group lost 3.8 per cent to HK$21.80.

 

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