China’s stocks fall the most in four weeks on policy headwinds from Politburo meeting

China’s stocks benchmark dropped the most in four weeks, as a top-level meeting by the Communist Party signalled that policymakers will pare the package aimed at bolstering economic growth.

The Shanghai Composite Index retreated 1.7 per cent, or 55.76 points, to 3,215.04. Other major equity gauges dropped as well, with a measure of the 50 biggest companies on the Shanghai exchange shedding 2.4 per cent as the worst performer. Hong Kong’s market was closed for holidays and will reopen on Tuesday.

China’s sovereign debts also fell, with the yield on the 10-year government bonds rising 3.3 basis points to 3.405 per cent.

A Politburo meeting chaired on Friday by Communist Party chief Xi Jinping re-mentioned “structural deleveraging,” a term that was dropped from major government statements a year ago, and reintroduced the lines on curbing speculation in the property market. The shift in wording came after official reports last week showed China’s economy grew by a faster-than-expected 6.4 per cent in the first quarter, close to the high end of the range of the annual growth target set by the government.

China International Capital said policymakers were less concerned about growth stabilisation now, while Goldman Sachs argued top leaders turned less dovish in the policy tone and expressed concerns about potential asset bubbles after a spurt in credit growth.