Mainland shares lower, CSI300 index falls 1.6%

Chinese mainland stocks fell on Friday, ending last week on a low, as weak producer inflation and investment data reinforced concerns of a renewed slowdown in the world’s second- biggest economy.

The blue- chip CSI300 index fell 0.3 percent to 3,518.76 points, while the Shanghai Composite Index also decreased 0.3 percent to 3,123.17 points.

For the past week, CSI300 dropped 1.6 percent, while Shanghai Composite Index contracted 1.1 percent.

The rally in blue- chips, which have far outperformed small- caps this year, appear to be losing steam amid signs of monetary tightening and renewed economic weakness.

The Shanghai SE 50 Index, an index tracking the 50 most representative blue- chips in Shanghai, slumped 2.6 percent, posing its worst week in 2017.

Data published last week showed that China’s economy generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.

Yu Gang, analyst at Zhongtai Securities, said that upside potential for mainland shares is limited, as liquidity remains tight while borrowing costs rise.

In a sign that China’s central bank intends to stabilize market sentiment, the People’s Bank of China injected a net 410 billion yuan ($ 60.17 billion) into money markets over the past week, the biggest weekly injection since mid- January.

Over the past week, banking and infrastructure stocks dragged the most among main sectors, sliding 3.1 percent and 3.3 percent respectively.

China Securities Regulatory Commission ( CSRC) approved IPO applications of only six companies last week, according to a Friday statement. This is fewer than the eight approved in the week before.

A slowing pace of new listings is expected to help ease market concerns over the liquidity stress.