Stocks in mainland China fell to their lowest in almost a month on Monday on news that the United States may curb Chinese companies' access to US capital markets, stoking fears of a major escalation in their year-long trade war. At close, the Shanghai Composite index was down 0.9% at 2,905.19, its lowest level since September 2, while the blue-chip CSI300 index was down 1%.
CSI300's financial sector sub-index fell 1.3%, the consumer staples sector slid 1%, the real estate index lost 0.1%, and the healthcare sub-index was down 0.4%. The smaller Shenzhen index lost 1.1%, and the start-up board ChiNext Composite index was weaker by 1.2%. President Donald Trump's administration is considering delisting Chinese companies from US stock exchanges, three sources briefed on the matter said on Friday.
The move would be part of a broader effort to limit US investment in Chinese companies, two sources said. One source said it was motivated by the Trump administration's growing security concerns about the companies' activities. "The US government directly intervening in pension funds, investment in China would impact the trend of overseas capital (increasingly) allocating renminbi assets, but that would also damage the long term interest of the US investor and capital markets," Citic Securities' analysts wrote in a note on Monday.
Nasdaq Inc is cracking down on initial public offerings of small Chinese companies by tightening restrictions and slowing down their approval, according to regulatory filings, corporate executives and investment bankers. Factory activity surveys in China pointed to slight improvement in September as domestic demand picked up, but analysts believe the gains will be short-lived as the property market cools and Sino-US trade tensions remain elevated.
The official Purchasing Managers' Index (PMI) rose to 49.8 in September, slightly better than expected and advancing from 49.5 in August. But it remained below the 50-point mark that separates expansion from contraction. Mainland China's financial markets will be closed between October 1 and October 7 for the National Day holiday.
Around the region, MSCI's Asia ex-Japan stock index was lower by almost 0.1%, while Japan's Nikkei index closed down 0.6%. ** So far this year, the Shanghai stock index is up 16.5% and the CSI300 has risen 26.7%. Shanghai stocks have risen 0.7% this month. About 11.67 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 13.29 billion. ** The Shanghai stock index is below its 50-day moving average and above its 200-day moving average.
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