Mainland stocks end lower amid trade fears

Major stocks on the Chinese mainland market ended the past week lower, amid a simmering trade battle with the US and as investors show rising concerns over domestic credit risks.

On Friday, the benchmark Shanghai Composite Index plunged to its lowest level since September 2016, closing 0.75 percent lower at 3,021.47 points. The smaller Shenzhen Component Index closed down 1.44 percent to 9,939.26 points.

Nearly 80 stocks plumbed by the maximum daily limit of 10 percent on Friday, led by smallcap tech companies and ship building shares.

Shenzhen’s NASDAQ-style board ChiNext Index lost 1.94 percent to close at 1,640.90 points Friday, notching a four-month low.

Analysts predicted that there will be a longterm correction in the valuations of small-cap companies, citing they are still overvalued and have no solid earnings.

The Shanghai index dropped 1.5 percent over the past week. Market sentiment was dragged down by rising trade tensions between China and the US. The development of the China-US trade relationship will continue to draw the attention of investors this week.

Last week, the Trump administration threatened to slap 25 percent tariffs on more than 1,000 types of Chinese imports related to the Chinese government’s “Made in China 2025” strategy, which triggered a quick reciprocal tariffs amercement from the Chinese central government.

In addition, eyes are also on the ongoing 2018 FIFA World Cup, which kicked off in Russia on Thursday. History shows that Chinese stocks usually suffer losses during the World Cup. During the past six World Cups between 1994 and 2014, A shares only posted growth during two tournaments.

Investors are also worried that the emotions of soccer fans may affect the stock market in the short term and that some capital will be moved from the A share market into soccer lotteries, analysts said.