Chinese stocks hit fresh four-year low on lingering economy and trade fears

Mainland Chinese stocks reversed to declines on Tuesday afternoon, to post a fresh four-year low that spilled over to Hong Kong equities, because of ongoing worries that a deepening trade war with the US will affect China’s economic growth.

The Shanghai Composite Index finished lower by 0.8 per cent, or 21.77 points, at 2,546.33, marking its lowest close since November 2014. The CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, decreased by 0.8 per cent, or 25.48 points, to 3,100.97, its lowest level since March 2016.

The Shenzhen Composite Index slid 1.9 per cent, or 24.71 points, to 1,256.37 and the Nasdaq style ChiNext also lost 1.9 per cent, or 25.74 points, to 1,313.48.

“There are some who really see a big bear case because of uncertainty in the economy,” said Kevin Leung, executive director of investment strategy at Haitong International Securities. “Chinese stocks are facing a lack of investors’ confidence and a liquidity crunch.”

Official data on Tuesday showed China’s producer price inflation moderated to 3.6 per cent from a year earlier in September, against August’s 4.1 per cent increase, pointing to slowing economic momentum. Consumer price inflation rose to 2.5 per cent in September from the previous month’s 2.3 per cent.

Slowing inflationary pressure and economic growth mean Beijing could turn to stimulus spending and easier credit, even as it vows to keep debt levels under control, analysts said.