HONG KONG: Chinese stocks ended lower on Tuesday after President Xi Jinping offered no specific support measures for the economy in a closely watched speech marking 40 years of market liberalisation, adding to pressure from faltering shares in other Asian markets and the United States on concerns about global economic growth.
** The Shanghai Composite index was down 0.8 percent at 2,576.65, while the blue-chip CSI300 index lost 1 percent. ** Xi called on Tuesday for the unswerving implementation of reforms on Beijing's terms but offered no new specific measures.
** Some in the market were expecting a big announcement on fiscal policy loosening and a tax cut of as much as 5 trillion yuan ($724.80 billion) in the next five years, said an analyst with a Chinese broker who asked not to be named.
** "Even if the U.S. slows down hiking, they are not going to cut rates next year. The room to loosen monetary policy (in 2019) is small, because the spread between Chinese and U.S. interests is small, and further easing by China could trigger capital outflows, so people were hoping for a boost from the fiscal side," he said.
** Economic growth is under pressure in China as the trade war bites. Growth target for 2019 has been lowered to 6.0-6.5 percent, said a researcher at the state planner on Tuesday, confirming an earlier Reuters report. ** The CSI 300 financial sector sub-index was lower by 1.4 percent, the consumer staples sector fell by 0.4 percent, and the healthcare sub-index was down 0.9 percent.
** The CSI 300 real estate index ended the day 3.7 percent lower, thanks to local media reports claiming that China could introduce a property tax legislation by 2020.
** The smaller Shenzhen index was down 0.8 percent and the start-up board ChiNext Composite index was weaker by 0.4 percent.
** The fall in Chinese shares was also driven by weakness across Asian markets, which brewed on the back of growth worries.
** The European Central Bank has cut its growth forecast, Bank of Korea adjusted recently, as did the government of Japan, said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. "The reason why A-shares have not fallen more is because people are looking forward to policy support (from the Chinese government)," Yip added.
** Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.7 percent, while Japan's Nikkei index was down 1.8 percent. ** All eyes are now on the annual Central Economic Work Conference, expected to be held later this week, as investors hope for more granular details of the policy package, said Yip.
** Ahead of the key meeting, the People's Bank of China showed signs of loosening this week, conducting its first 14-day reverse repo operations since late September. It also vowed to guide reasonable growth of credit and social financing and further improve the monetary policy transmission channel.
** Investors expect the recent loosening to provide "support for the equity market, and that they should watch for opportunities in the market rebounding, and pay appropriate attention to high dividend strategies", Tian Ming, an analyst with Minsheng Securities, said in a memo. But the market is likely to be volatile in the near term as liquidity tightens towards the year-end, Tian added.
** The largest percentage losers on the Shanghai index were Zhejiang Hisun Pharmaceutical Co Ltd, down 8.6 percent, followed by Asia Cuanon Technology Shanghai Co Ltd , losing 8.4 percent, and Poten Environment Group Co Ltd, down by 7.5 percent.
Comments
Comments are closed.