Shanghai index ends at 31-month low on scandal

Shanghai stocks closed at a near 31-month low on Friday, dragged down by a slump in healthcare firms amid a vaccine scandal fallout, but planned talks between the US and China helped ease trade war fears.

The blue-chip CSI300 index ended 1.5 percent down at 3,229.62 points. Meanwhile, the Shanghai Composite Index closed down 1.3 percent at 2,668.97 points, breaching the psychological key 2,700 point level once again.

Both indexes posted their fifth straight day of losses. Over the past week, the Shanghai index was down 4.5 percent, while blue chips fell 5.2 percent.

Sectors retreated across the board on Friday, led by healthcare firms, with an index tracking the sector closing down 3.3 percent.

China sacked a senior provincial official and is probing a former top drug regulator after a safety scandal at vaccine maker Changsheng Biotechnology Co, which again warned it could be delisted over the issue.

Bucking the trend, steel and coal shares rebounded on Friday.

Analysts predict that those shares will post gains again this week, as investors are looking forward to seeing firms in this sector post robust growth in profit in the following months amid strong steel demand and the central government’s strengthening anti-pollution campaign.

In addition, China’s consistent efforts in overcapacity reduction can also inject new vitality and efficiency into steel and coal industries. According to media reports, the profit margin of major companies in the steel sector rose 93.4 percent in the first half of the year from the same period of last year.

China and the US said their governments will hold lower-level trade talks this month, raising hopes that the escalating trade war could be eased, a move that would to some extent support stock market sentiment in the following weeks.