China stocks fall as bank weakness offsets property strength; HK flat
SHANGHAI: China stocks pulled back from seven-month highs yesterday as a correction in bank shares offset continued strength in the property sector.
Hong Kong shares were roughly flat after retreating from nine-month highs, while other Asian stock markets saw modest gains, buoyed by a strong Wall Street performance overnight.
China’s blue- chip CSI300 index fell 0.4 per cent to 3,379.41 points by the lunch break, while the Shanghai Composite Index lost 0.5 per cent to 3,108.95.
After weaker-than-expected July lending and money supply data on Friday, China’s central bank has sought to reassure markets that credit conditions remain supportive.
The People’s Bank of China injected more liquidity into the banking system on Monday, extending 289 billion yuan ($43.55 billion) of medium term lending facility loans.
However, expectations of more aggressive monetary easing soon by the central bank – such as cuts in interest rates or banks’ required reserve ratios (RRR) – were weakened after a senior central bank official said China’s banking system has ample liquidity, and that interest rates are already at a low level.
Wu Kan, head of equity trading at investment firm Shanshan Finance, said the dramatic bidding war around developer Vanke has rekindled interest in stocks recently, but economic fundamentals don’t support a bull market.
“You see a lot of excitement in markets now as people see the chance of making quick money in some sectors,” Wu said.
“But the state of the economy doesn’t justify sustained market rally. Sector rotation is more likely.” — Reuters