SHANGHAI, Aug 15 — China stocks extended losses today to a third straight day of declines as worries over the country’s cooling economy and the yuan’s descent to a 15-month low knocked investor confidence.
The blue-chip CSI300 index fell 2.4 per cent to 3,291.98 points, while the Shanghai Composite Index closed down 2.1 per cent at 2,723.26 points.
The declines follow downbeat economic data reported yesterday, which comes as a trade war with the United States threatens to pile more pressure on the world’s second-largest economy.
To support growth, China has rolled out a US$14 billion urban railway plan and pushed local governments to speed up issuance of special bonds for funding infrastructure projects.
Official data yesterday showed fixed-asset investment expanded by a less-than-expected 5.5 per cent in January-July, a result of Beijing’s crackdown on lavish local government borrowing for projects to boost growth.
The yuan weakened to a 15-month low today and flirted with a key support level not seen since 2008 as the dollar extended gains and a raft of data pointed to further slowing in China’s economy.
“While the PBOC has propped up the yuan against the US dollar by raising FX risk reserve requirements, the recent plunge in the currencies of some emerging economies (eg. Argentina and Turkey), triggered by debt and geopolitical risks, have adversely affected sentiment,” Gao Ting, Head of China Strategy at UBS Securities, wrote in note.
Sectors retreated across the board, with the CSI300 sub-index tracking consumer firms dropping 2.8 per cent and the sub-index tracking healthcare firms plunging 3.8 per cent.
Both sectors have come under heavy pressure in recent weeks amid a scandal around domestically made vaccines that has undermined broader consumer confidence, as well as heightened worries about the domestic economy and the trade outlook.
Leading liquor maker Jiangsu Yanghe Brewery closed down 4.9 per cent at a four-month low, while Tonghua Dongbao Pharmaceutical plunged the maximum allowed 10 per cent. — Reuters
Source: The Malay Mail Online