Beijing support fails to bolster shares amid global rout, HK falls

People stand in front of an electronic board showing a China stocks advertisement outside a brokerage in Tokyo September 11, 2018. — Reuters pic
People stand in front of an electronic board showing a China stocks advertisement outside a brokerage in Tokyo September 11, 2018. — Reuters pic

SHANGHAI, Oct 25 — China’s fell today amid a global selloff, as fresh market-support measures by the government failed to soothe investor worries about high leverage and the Sino-US trade war.

By the midday break, China’s blue-chip CSI300 index was 1.34 per cent lower at 3,145.52 points while the Shanghai Composite Index was down 1.4 per cent at 2,566.21 points. Both indexes had ended slightly higher the previous session.

The smaller Shenzhen index was down 1.99 per cent and the start-up board ChiNext Composite index was weaker by 2.55 per cent.

“While Chinese stocks are burdened by the US market, losses are relatively small. Chinese investors continue to have a thread of hope,” Liu Min, an analyst at FXTM China, said in a note, noting a daily stream of policy announcements aimed at supporting markets.

But analysts at Huatai Securities forecast continuing weakness.

“Share prices are already at relatively low levels, but by no means does this mean that risk assets represented by stocks are going to turn higher,” they said in a morning note. “We advise standing fast and waiting for policy signals.”

Hong Kong’s benchmark Hang Seng index was down 1.8 per cent at 24,794.60 points. The Hang Seng has lost 10.8 per cent so far this month, putting it on track for a record-matching sixth consecutive monthly fall.

The index has only posted six straight monthly losses once in its history, in 1982.

The Hang Seng’s China Enterprises Index was 1.71 per cent lower at 10,051.40 points, and Cathay Airways Ltd touched a nine-year low following news of a data leak.

Chipmakers were hit particularly hard following losses of their US peers yesterday. A sub-index of the CSI tracking IT firms fell 3.24 per cent after the Philadephia SE Semiconductor Index fell 6.6 percent following mixed results and disappointing forecasts.

In Hong Kong, the Hang Seng index tracking the IT sector was down 3 per cent.

The CSI300 consumer sub-index was 3.07 per cent lower, health care firms lost 2.58 per cent and were 0.06 per cent lower.

Across the region, Asian shares plunged as hundreds of billions of dollars haemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on since 2011, wiping out all its gains for the year.

A further slide in China stocks could worsen liquidity pressures in a market already strangled by about US$620 billion (RM2.58 trillion) worth of shares pledged for loans.

Investors largely ignored news overnight that government-backed Shenzhen Investment Holding would issue one billion yuan (RM599.3 million) of bonds, raising money to support struggling listed firms.

This morning, China’s and regulator published a notice allowing asset management firms to launch dedicated products that provide liquidity support to listed firms in a bid to reduce risks related to pledged shares.

Elsewhere, China’s yuan was slightly weaker on a stronger US dollar. The yuan was quoted at 6.9432 per US dollar at 0410 GMT, 0.01 per cent weaker than yesterday’s close of 6.9422.

Chinese government futures rose slightly as equity markets fell. Chinese 10-year Treasury futures for December delivery, the most traded contract, gained 0.12 per cent to 95.565. — Reuters

Source: The Malay Mail Online

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