Update | Chinese shares extend losses as government props up markets; circuit breaker seen causing more trading shutdowns in days ahead
Chinese market regulator tells officials not to dump shares after sales ban expires and defends circuit breaker from criticism
Chinese stocks extended their losses on Tuesday although an index of large-cap shares in Shanghai and Shenzhen edged up at the close as the so-called ‘national team’ of the government bought shares to stem the rout which hit equities in the previous session.
Brokers said market regulator the China Securities Regulatory Commission (CSRC) and other government agencies which they nicked named as the “National Team” directly invested into stocks to boost the market.
The CSI300 Index used as a trigger for the market’s circuit breaker closed 0.28 per cent higher at 3,478.78, having fallen 7 per cent on Monday and forcing the suspension of trading in Shanghai and Shenzhen. The other exchanges closed lower, adding to the losses seen in the previous session.
The Shanghai Composite Index settled 0.26 per cent easier at 3,287.71 while the Shenzhen Composite Index dropped 1.88 per cent to close at 2,079.77.
In Hong Kong, the benchmark Hang Seng Index followed suit by closing at 21,188.72, losing 138.4 points, or 0.65 per cent, while the H-share index tracking mainland-based companies fell 88.17 points or 0.95 per cent to conclude at 9,223.01.
“We have to wonder how far the National Team or the policy measures can continue to support the market. The economic data remains weak and the yuan keeps falling...Investors have no confidence to buy in the market,” said Louis Tse Ming-kwong, director of VC Brokerage.
The offshore yuan traded at 6.5680 to the dollar, weaker by 0.28 per cent and near its five year low. The onshore yuan was at 6.5225 to the greenback, up 0.17 per cent from the previous session.