China’s stock continues to slide as fears mount

CHINESE stocks dropped by almost 4 percent yesterday, denting hopes that a slew of regulatory measures issued by Beijing over the past three months had brought some stability to the market.

Concerns about the Chinese economy mean stocks are down 6 percent so far this week, with the drop exacer- bated by thin trading volumes as many investors opt to stay on the sidelines.

China’s benchmark CSI300 index of the biggest listed stocks in Shanghai and Shenzhen closed down almost 4 percent yesterday, while the Shanghai composite index dropped 3.55 percent to end at 3 004 points, just above the psychologically important 3 000 mark.

The fall will be of dismay to Chinese policymakers trying to halt the market slide, given that up until this week trade in September had been relatively steady compared with the previous two tumultuous months.

Chinese equity markets have dropped about 40 percent since mid-June despite frantic attempts by the authorities to curb speculation and pressure state-owned institutions to buy up stocks.

However, persistent doubts that China’s economic growth this year will meet the government’s official forecast of 7 percent are deterring many investors from re-entering the market.

Deterrent

Some retail investors who spoke to Reuters said they were waiting for the Shanghai composite index to go down to 2 500 before they started buying again.

Small cap stocks have posted even larger falls, with the CSI300 IT index down 7.4 percent yesterday.

“With a slim chance of making a profit in this market, money is not coming in,” Zhou Lin, an analyst at Huatai Secu- rities, said.

Data showed heavy investor redemptions last month, with total net assets of Chinese stock funds slumping 44 percent to 724.8 billion yuan (R1.5 trillion).

Investors’ hesitation comes despite Beijing’s attempts to revive slowing economic growth by ramping up government spending. Data yesterday showed fiscal expenditure in August was 25.9 percent higher than a year ago.