SHANGHAI: China stocks fell on Friday, dragged by losses in tech and automobile shares after the central bank kept its policy rates unchanged, even as the economy grapples with its worst coronavirus outbreak in more than two years.
** China’s blue-chip CSI300 index fell 0.4% by the midday break, while the Shanghai Composite Index lost 0.6%. Shanghai’s tech-focused STAR market, and Shenzhen’s start-up board ChiNext both declined more than 1.5%.
** The Hong Kong market is closed on Friday for a holiday.
** China’s central bank kept borrowing costs of its medium-term policy loan unchanged for the third straight month, despite Beijing calling for more monetary stimulus to cushion an economic slowdown.
** Investors are increasingly worried about the economic cost of China’s zero-COVID policy, which has put the financial hub of Shanghai, and roughly a dozen other cities under full or partial lockdowns, disrupting economic activity.
** “The People’s Bank (PBOC) forwent the opportunity to lower its policy rates today. That’s somewhat surprising given the sharp economic downturn and recent calls from China’s leadership for monetary support,” wrote Julian Evans-Pritchard, senior China economist at Capital Economics.
** “It underscores the reluctance of the central bank to aggressively ease policy. But we think it will have little choice but to do more before long.”
** Automobile shares slumped over 2%.
** China’s anti-COVID-19 curbs are clogging highways and ports, stranding workers and shutting countless factories - disruptions that are rippling through global supply chains.
** Bucking the trend, real estate and infrastructure stocks rose, amid signs China is loosening real estate curbs to invigorate its struggling economy.
** Healthcare stocks are also in the bright spot, as investors bet the sector will benefit from the pandemic as drugmakers scramble to develop anti-COVID medicines.