Chinese stocks slip lower, taking breather after recent gains related to Beijing’s stabilising measures

PUBLISHED : Thursday, 20 September, 2018, 7:32pm
UPDATED : Thursday, 20 September, 2018, 7:32pm

Chinese stocks traded in Shanghai and Shenzhen slipped on Thursday, led lower by declines in telecommunications and technology stocks taking a breather from recent optimism over supportive policies from Beijing to offset the adverse impact from the escalating trade war between the world’s two biggest economies.

The Shanghai Composite Index edged lower 0.1 per cent or 1.61 points to 2,729.24. The CSI 300 – which tracks large companies listed on China’s two major exchanges – decreased 0.1 per cent or 2.35 points to 3,310.13.

The Shenzhen Composite Index fell 0.2 per cent or 3.20 points to 1,420.02 and the Nasdaq-style ChiNext was down by 0.3 per cent or 4.78 points to 1,387.62.

“There doesn’t seem to be a big threat to China’s economy for now given the boost from infrastructure investment but the price action in the market was a bit too much,” said Jimmy Zhu, chief strategist, Fullerton Markets.

G-bits Network Technology Xiamen fell 1.9 per cent to 120.03 yuan, Shanghai East-China computer fell 3.2 per cent to 19.08 yuan and Shanghai Weaver Network lost 2.6 per cent to HK$84.61. Guangdong Super Telecom dropped 3 per cent to 2.46 yuan.

China plans to reduce the average tariff rate on imports from most of its trading partners as soon as October, Bloomberg News reported, in line with Beijing’s pledge to its trading partners that it would take measures to further increase imports.

Liquidity in the financial system remains accommodative, after the People’s Bank of China on Monday unexpectedly lent 265 billion yuan (US$38.58 billion) to banks via its one-year medium-term lending facility.

Hong Kong stocks rose on Thursday rose modestly, reflecting the third straight day of gains.

The Hang Seng Index edged up 0.3 per cent or 70.30 points at 27,477.67, and the Hang Seng China Enterprises Index tacked on 0.5 per cent or 50.90 points to 10,792.59.

“The focus remains on China’s stabilising measures and the benchmark index may be heading toward the 28,000 resistance level,” said Linus Yip Sheung-chi, chief strategist First Shanghai Securities. “The US and China are probably taking a short break now before escalating trade tensions later.”

HSBC Holdings climbed 1 per cent to HK$68.65, marking its highest level in over two weeks and contributing 28 points to the benchmark index. After the close of regular trading on Wednesday, the blue chip declared a second interim dividend for this year of 10 US cents per ordinary share.

Hong Kong-listed construction and cement stocks continued to rally after Beijing pledged to step up infrastructure investment in key areas of the economy.

China Resources Cement Holdings rose 2.2 per cent to HK$9.34 and Anhui Conch Cement advanced 1.6 per cent to HK$46.95, its sixth straight day of gains and China Communications Construction added 0.1 per cent to HK$7.97.

Chinese developers rose further after the government said it was planning to allow mortgages and rents to be deducted from individuals’ taxable income. China Evergrande Group was up 1.2 per cent to HK$26.20, China Overseas Land & Investment gained 1.4 per cent to HK$25.40, Sunac china Holdings rose 1.2 per cent to HK$26.20.

Oil stocks however took a breather from a strong rally that started at the end of last week that was fuelled by expectations of higher oil prices. CNOOC fell 1.7 per cent to HK$14.68, Sinopec lost 0.5 per cent to HK$7.77 and PetroChina slipped 0.2 per cent to HK$6.16.