Chinese stocks rebound from worst performance in four months as PetroChina, energy producers surge
Chinese stocks rebounded on Tuesday from their biggest decline in four months, as PetroChina and other energy producers gained on strong crude oil prices.
The Shanghai Composite Index rose by 0.2 per cent at the close. On Monday, it had tumbled by 3.7 per cent to catch up with losses in regional markets, as trading resumed after a weeklong holiday.
In Hong Kong, the Hang Seng Index fell for a sixth straight day on Tuesday.
Buying on mainland bourses, however, remained subdued. The daily turnover at the Shanghai exchange was 5.1 per cent below its 30-day average, and that at the smaller Shenzhen exchange was 21 per cent lower, according to Bloomberg data.
Traders reacted to mixed news from a State Council meeting chaired by Premier Li Keqiang on Monday. While Beijing said it would raise the tax rebate for exporters ranging from 1 to 5 percentage points starting next month, policymakers also decided to scrap a cash subsidy on home purchases that are part of shanty town redevelopment projects in some cities.
“The rebound is pretty weak and declines will probably resume soon,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “Investors are worried about the strength of an economy that’s weighed down by a trade war, and capital outflows on the back of surging US Treasury yields.”
Foreign investors sold mainland shares through the stock connect programmes with Hong Kong for a second day on Tuesday, with net sales totalling 2.91 billion yuan (US$420.4 million), according to Bloomberg data.
The Shanghai Composite Index added 4.50 points to 2,721.01. The CSI 300 Index of big caps, however, slipped by 0.1 per cent and the ChiNext gauge of smaller companies also shed 0.6 per cent.
A gauge tracking energy producers rallied by 2.5 per cent, in what was the best performance among the CSI 300’s 10 industry groups. PetroChina, the country’s biggest oil producer, surged by 4.4 per cent to 9.22 yuan and China Petroleum & Chemical Corporation, or Sinopec, gained by 4.2 per cent to 11.63 yuan. China Shenhua Energy, the country’s biggest coal producer, advanced by 2.7 per cent to 20.48 yuan.
Futures contracts on crude oil traded at US$74.70 a barrel in New York, hovering near their highest level since November 2014.
Gree Electric Appliances, China’s largest manufacturer of air conditioners, added 2.4 per cent to 38.83 yuan after saying its third-quarter profit may have risen by as much as 46 per cent from a year ago.
Property developers, on the other hand, retreated following news of the scrapping of the cash subsidy for homebuyers affected by shanty town revamps in cities that face pressure for an upside in housing prices and have low inventories. Hangzhou Binjiang Real Estate Group dropped by 1.3 per cent to 3.88 yuan and China Merchants Shekou Industrial Zone Holdings lost by the same magnitude to 17.43 yuan.
In Hong Kong, the Hang Seng Index fell by 0.1 per cent, or 29.66 points, to 26,172.91 for a sixth day of declines on Tuesday, extending a 5.8 per cent losing streak. But the Hang Seng China Enterprises Index, or the H-share gauge, rose by 0.3 per cent.
Chinese sportswear maker ANTA Sports Products slumped by 11 per cent to HK$30.50 on concerns its store sales growth will be moderate.