‘Black Thurs­day’ as global falls hit Chi­nese bourses

Shanghai Daily - - BUSINESS - Tracy Li STOCKS

CLOUDED by a big overnight crum­ble on Wall Street, China’s mar­kets fell sharply yes­ter­day — with Shang­hai hit­ting a four-year low.

The main in­dexes in Shang­hai and Shen­zhen tum­bled more than 5 per­cent and more than 1,000 stocks fell by the daily 10 per­cent limit.

The Shang­hai Com­pos­ite In­dex slumped 5.22 per­cent, or 142.38 points, to close at a four-year low of 2,583.46 af­ter the big­gest sin­gle day loss since Fe­bru­ary 2016, ac­cord­ing to Wind In­for­ma­tion, a Chi­nese fi­nan­cial ser­vices firm.

The smaller Shen­zhen Com­po­nent In­dex fell by 6.07 per­cent to fin­ish at 7524.09 points, while the Nas­daqstyle ChiNext en­ter­prise board de­clined 6.30 per­cent at 1261.88.

The blue-chip CSI300 in­dex, mean­while, tum­bled 4.8 per­cent to 3,124.11 points, its low­est level since July 2016.

Steven Le­ung, sales di­rec­tor at bro­ker­age UOB Kay Hian, said the im­pact of the US eq­uity sell-off and trade war con­cerns were weigh­ing on stocks and would en­dure across Asia.

Overnight on the US stock mar­kets, both the Dow Jones In­dus­trial Aver­age and S&P 500 posted their largest drops since Fe­bru­ary, while the Nas­daq recorded its big­gest sin­gle day sell-off since June 2016.

Com­mu­ni­ca­tions equip­ment com­pa­nies, se­cu­ri­ties bro­kers and do­mes­tic chip mak­ers led the losses in China, with shares of HNA Tech­nol­ogy, a firm en­gaged in the op­er­a­tional man­age­ment, strate­gic in­vest­ment and in­no­va­tion in ar­eas of cloud com­put­ing, big data and ar­ti­fi­cial in­tel­li­gence, slipped by the daily max­i­mum limit of 10 per­cent to close at 3.38 yuan(49 US cents).

An­a­lysts pointed out that the slump in the A-share mar­ket was mainly trig­gered by the drop in the US and Asia-Pa­cific mar­kets. Credit Suisse said that the Chi­nese stock mar­ket is poised for a tech­ni­cal re­bound in its lat­est re­search note.

“Un­less you with­draw from stocks en­tirely, you’d want to go for more de­fen­sive stocks, like pub­lic util­i­ties,” Le­ung said.

Shares in in­fras­truc­ture firms from China’s west bucked the down trend. The shares ral­lied af­ter Chi­nese Pres­i­dent Xi Jin­ping called for the launch of the plan­ning and con­struc­tion of the SichuanTi­bet rail­way.

Shares in Ti­bet Tianlu, prin­ci­pally en­gaged in con­struc­tion and min­eral ex­plo­ration, jumped near 7 per­cent.

One Shang­hai-based trader ex­pects the mar­ket will find some sup­port given it has been los­ing al­ti­tude over sev­eral months, while US stocks are fall­ing from a high point.

“Fund man­agers will find cer­tain stocks very cheap,” he said. But there are risk fac­tors for main­land stocks as a China-US trade war con­tin­ues to hurt ex­porters, which will in turn weigh on the ma­jor in­dices.

The in­dex mea­sur­ing price dif­fer­ences be­tween du­al­listed com­pa­nies in Shang­hai and Hong Kong stood at 123. A value above 100 in­di­cates Shang­hai shares are priced at a pre­mium to shares in the same com­pany trad­ing in Hong Kong, and vice versa. There was net sell­ing of main­land shares of about 3.5 bil­lion yuan through the con­nect scheme link­ing the Hong Kong and main­land mar­kets.

An in­vestor looks at stock price move­ments on a com­puter screen at a se­cu­ri­ties com­pany in Bei­jing. Chi­nese stock mar­kets plunged to their low­est in four years yes­ter­day af­ter a global rout. — AFP

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