Chinese stocks tumble as state media warning triggers selloff
SHANGHAI. Nov 17 — Chinese stocks slumped, led by Shenzhen shares, as a warning by state media that one of the nation’s hottest stocks was climbing too fast triggered a selloff.
The Shenzhen Composite Index closed down 2.8 per cent, its largest decline since July 17. Liquor makers and technology companies that had outperformed this year were among the biggest contributors to losses. In Shanghai, Kweichow Moutai Co plunged 3.9 per cent after Xinhua News Agency said shares in China’s biggest liquor maker should rise at a slower pace.
The unusual critique capped a week that saw a rout in sovereign bonds spill into the equity market amid concern about a government deleveraging campaign and faster inflation. For the week, the Shenzhen gauge fell 4.2 per cent, its worst loss since May 2016. The Shanghai benchmark declined 1.5 per cent.
“The Xinhua warning was the last straw,” said Ken Chen, a Shanghai-based analyst with KGI Securities Co. “Expectations of worsening liquidity conditions are also hurting stocks.”
Among liquor makers, Wuliangye Yibin Co slid as much as 5.3 per cent in Shenzhen, the most since July 2016, and Luzhou Laojiao Co fell 4.7 per cent. The stocks, which have more than doubled this year, pared their losses to 1.8 per cent and 2.3 per cent, respectively, by the close. Analysts are bullish on Moutai, with the stock attracting 26 buy ratings, two holds and zero sells.
“Xinhua is concerned that a runaway rally in a heavyweight like Kweichow will hamper the stability of the overall market,” said Hao Hong, chief strategist at Bocom International Holding Co in Hong Kong.
BOE Technology Group Co and Hangzhou Hikvision Digital Technology Co, two of the best performers on the Shenzhen gauge this year, dropped at least 2 per cent.
Stocks rose in Hong Kong, led by banks amid optimism over new shareholding rules. The Hang Seng China Enterprises Index was up 0.8 per cent at 3:23 p.m. local time, while the Hang Seng Index advanced 0.6 per cent. — Bloomberg
Source: The Malay Mail Online