China shares tumble, CB liquidity move fails

SHANGHAI: China stocks tumbled yesterday, as investors back from a long holiday dumped shares across the board despite Beijing’s weekend move to spur more lending at a time of growing fears the economic impact of the SinoUS trade war will deepen. Spot yuan ended the

afternoon at its lowest official close in seven weeks against the US dollar as expectations of more easing measures by China, plus surging US bond yields, put pressure on the Chinese currency. Beijing has stepped up liquidity support across the financial in recent months as policymakers have focused on calming fears of capital outflows and sought to soothe battered markets as anxiety grows that the tit-for-tat trade war with the United States could deal a damaging blow to the broader economy.

“There’s an acute shortage of confidence in the market. Few investors are buying,” said Alvin Ngan, a Hong Kong-based analyst at brokerage Zhongtai International.

“China’s economy is under heavy downward pressure... and you need time to observe if recent easing measures are effective or not,” he added. Yesterday, the blue-chip CSI300 index plummeted 4.3 percent to 3,290.90 points, its sharpest one-day percentage fall since February 2016. The Shanghai Composite Index lost 3.7 percent, to 2,716.51 points, its worst day since June 19. For the year, both Chinese indexes are down about 18 percent. In Hong Kong, the benchmark Hang Seng Index dropped 1.4 percent to close at its lowest points in 15 months, extending last week’s 4.4 percent loss as investors worried about tensions between the US and China. Yesterday was the first chance for mainland investors to react to the escalating trade tensions and a sell-off in Hong Kong markets last week after a week-long holiday on the mainland to celebrate National Day.