China stocks lower as ZTE plunge

China stocks ended lower on Wednesday, as a slump in shares of telecommunications giant ZTE Corp sent shivers through the market and on resurfaced China-US trade tensions. The blue-chip CSI300 index ended 1 percent lower at 3,788.34 points, while the Shanghai Composite Index closed down 1 percent at 3,049.80 points.
Most sectors lost ground. Telecoms firms led the declines, with an index tracking major players in the industry losing 3 percent. Investors wiped about $3 billion off embattled Chinese telecommunications giant ZTE Corp's, market value as it resumed trade on Wednesday after agreeing to pay up to $1.4 billion in penalties to the US government.
During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36 percent discount to the closing level on April 16. "We expect the reasonable price for ZTE's A-shares to be 20.34 yuan, as the event is expected to reduce the firm's future profits by about 50.3 billion yuan," China's domestic brokerage CITIC Securities wrote in a report.
Adding to worries, the trade frictions between the United States and China are also back on the radar ahead of Friday, by when Washington said it will release a list of $50 billion worth of Chinese goods that will be subject to a 25 percent tariff. Bucking the broad weakness, some agriculture firms rallied as punters expect those firms to benefit from Beijing's potential retaliatory measures against Washington.
Investors are also looking forward to the Federal Reserve policy decision later in the day. The Fed is widely expected to raise interest rates for the second time this year after a move in March, but the bigger question for investors is the outlook for future monetary tightening amid an ongoing economic expansion.
The largest percentage gainers in the main Shanghai Composite index were Shenyang Jinbei Automotive Co Ltd up 10.05 percent, followed by BanBao Co Ltd gaining 10.02 percent and Sichuan Tianyi Science & Technology Co Ltd up by 10.01 percent. The largest percentage losses in the Shanghai index were Jilin Expressway Co Ltd, which ended down 10.11 percent, followed by Henan Rebecca Hair Products Co Ltd , which closed 10.06 percent lower and Jiangxi Lianchuang Opto-electronic Science & Technology Co Ltd , which ended down 10.01 percent.
So far this year, the Shanghai stock index is down 7.8 percent, the CSI300 has fallen 6 percent, while China's H-share index listed in Hong Kong is up 2.9 percent. Shanghai stocks have declined 1.48 percent this month. About 11.96 billion shares were traded on the Shanghai exchange, roughly 90.9 percent of the market's 30-day moving average of 13.16 billion shares a day. The volume in the previous trading session was 11.33 billion.