China Daily Global Edition (USA)
Stocks extend last month’s rout
There’s a spillover of psychological fear from a decline in US stocks and ahead of holidays, says an analyst
Chinese mainland stocks fell, extending last month’s rout, as traders unwound bullish bets and oil’s drop below $30 a barrel weighed on energy producers.
The Shanghai Composite Index slid 0.4 percent to 2,739.25 at the close, extending its slide this year to 23 percent. China Coal Energy Co and PetroChina Co led a gauge of energy companies to a record low. Developers gained after the central bank lowered mortgage down payments for first-home buyers.
The Hang Seng China Enterprises Index tumbled 2.5 percent at the close, its lowest since March 2009.
The central bank said it will allow banks to cut the minimum required mortgage down payment to 20 percent from 25 percent for first-home purchases to the lowest level ever, as it steps up support for the property market. Mainland markets will be closed all next week for Lunar New Year holidays.
“There’s a spillover of psychological fear from a decline in US stocks and ahead of next week’s holidays, people just want to dump holdings,” said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong.
Futures on the Standard & Poor’s 500 Index signaled a third day of declines in US shares. The Hang Seng Index fell for a third day, losing 2.3 percent, while the CSI 300 Index shed 0.4 percent.
Trading volumes in Shanghai were 27 percent below the 30-day average with the benchmark gauge’s 30-day volatility near the highest since October. Net selling of Shanghai shares through the exchange link with Hong Kong rose to the highest since Nov 11.
Consumer companies found little comfort from data showing an improvement in services.
China’s services purchasing managers’ index rose to 52.4 in January, the highest point since July, compared with 50.2 in December, according to data from Caixin Media and Markit Economics.
A gauge of energy companies fell 1.6 percent as oil held losses near $30 a barrel after the biggest two- day drop in almost seven years.
China Coal slid 1.7 percent. PetroChina, the biggest weighting on the main board, lost 1.4 percent in Shanghai and 3.9 percent in Hong Kong.
The yuan in Hong Kong fell 0.3 percent to 6.6463 per US dollar, the lowest level since Jan 8.
The extra cost for three-month options to sell the yuan against the dollar in the Hong Kong market over contracts to buy jumped in January by the most since 2011.
The outstanding balance of margin debt on the Shanghai and Shenzhen stock exchanges dropped for 22 straight days to 897.6 billion yuan ($136.4 billion) on Monday, according to Bloomberg. It fell below the lows reached during a summer rout, when the Shanghai gauge tumbled more than 40 percent from mid-June through its August low.