China stocks falter as PBOC move disappoints, growth trails official target, banks slump

Name: How Covid shut down Shanghai
Uploaded: 2022-04-18T03:02:19.000Z
Duration: 5 min 59 s
Description: How Covid shut down Shanghai

Stocks closed near a one-week low as financials and raw-material producers paced losses after PBOC withheld firepower in last week’s easing

GDP report showed growth trailed official target pace as Covid-19 lockdowns unsettled investors

Reading Time:2 minutes

Why you can trust SCMP

Investors look at computer screens showing stock information at a brokerage house in Shenyang in pre-pandemic days. Photo Reuters

Zhang Shidong

Published: 11:02am, 18 Apr 2022Updated: 4:46pm, 18 Apr 2022

Stocks in mainland China fell to near a one-week low after the economy grew last quarter at a pace below the national target amid Covid-19 lockdowns, while policy easing signals disappointed investors.

The Shanghai Composite Index retreated 0.5 per cent to 3,195.52 at the close of Monday trading. It has lost 12 per cent this year, the worst among major Asia-Pacific indices. Markets in Hong Kong are closed for a public holiday. Regional indices also weakened as rising commodity prices rekindled inflation concerns.

China Merchants Bank tumbled 7.4 per cent to 43.39 yuan, the most since August 2015, slamming a gauge of financial stocks by 3 per cent. Ping An Bank lost 3.2 per cent to 15.90 yuan and BOC International China slumped 5.7 per cent to 13.28 yuan.

Recent lockdowns will hurt domestic consumption and labour market recovery and “more earnings downgrades are likely,” said Meng Lei, a strategist at UBS in Shanghai. “We think only stronger monetary easing, a rebound in credit growth and property policy loosening would reverse investors’ sentiment.”

05:59

How Covid shut down Shanghai

China on Friday lowered banks’ reserve requirement ratio by 25 basis points, the smallest cut in history, as the central bank expressed concerns about global inflation and the pace of US rate increases. The token easing underwhelmed bullish bets for a stronger dose of easing among stock strategists.