Tight liquidity likely to keep benchmark under 3,300 points

The benchmark Chinese mainland stock index will have a hard time breaching the 3,300- point mark in the near term as limited liquidity and underperforming listed companies drag on the market, domestic media reports said.

Keeping in mind that China lowered its GDP growth target for 2017 to around 6.5 percent, it’s unrealistic to expect every listed company to dramatically increase their profits, according to a report by financial news portal hongzhoukan. com on Saturday.

China’s major stock indexes were little changed on Friday, but suffered their worst month of 2017 on fears that regulators will step up their crackdown on riskier types of financing and speculation.

The blue- chip CSI 300 Index fell 0.2 percent to 3,439.75 points on Friday, adding to the week’s 0.78 percent loss.

The benchmark Shanghai Composite Index edged up 0.08 percent to 3,154.66 points, but still lost 0.58 percent for the week.

The Shenzhen Component Index closed 0.05 percent lower at 10,234.65 points, down 0.77 percent for the week.

The ChiNext, the country’s NASDAQ equivalent, increased 0.64 percent for the week.

Domestic fund managers have trimmed their suggested equity exposure for the next three months to the lowest in six months, according to a monthly Reuters poll.

Sustained efforts by authorities to wring excessive leverage from the system could tighten liquidity and further sour investor sentiment, said Zhang Gang, an analyst with China Central Securities, who added that he did not see stocks suffering further substantial losses.

China watchers have expected another modest increase in short- term interest rates by the People’s Bank of China ( PBC) around June.

Still, the central bank and other regulators have ramped up pressure on a number of fronts as they look to contain financial risks after years of debt- fueled stimulus.

The PBC has drained a net 815 billion yuan ($ 118.21 billion) from money markets via open market operations so far in 2017, but has stepped in and injected funds from time to time when markets appeared to be growing stressed.

The economy has been another concern, with investors worrying growth could have peaked in the first quarter and may slow over the rest of the year.