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SHANGHAI: China shares slumped on Thursday to a five-week closing low, as prolonged COVID-19 lockdowns and a lack of adequate policy support left investors worried about the economic growth outlook, while oil giant CNOOC soared in its Shanghai debut.

The blue-chip CSI300 index fell 1.8% to 3,995.83, while the Shanghai Composite Index declined 2.3% to 3,079.81, marking their fifth straight session of losses.

Confidence is wearing thin as both indexes have now erased almost all gains made in the wake of Vice Premier Liu He’s pledge to support the economy and financial markets on March 16.

“They’ve declined to cut the medium-term funding rate, they’ve declined to trim the loan prime rates and all they’ve done is tinker at the side by trying to do these targeted stimulus measures,” said Jeffrey Halley, a senior analyst at brokerage OANDA.

“Until the market sees the colour of the Chinese government’s money, we’re going to struggle to maintain any rallies here.” Nomura analysts said they were cutting their second-quarter China gross domestic product growth forecast to 1.8% year-on-year from 3.4%, citing worsening high-frequency April activity data, the rising number of cities under full and partial lockdowns, and signs that Beijing is unlikely to end its zero-COVID strategy soon.

Global fund managers have also said lockdowns in major cities including Shanghai have become the predominant risk to China’s economy and markets.

During a video speech to the annual Boao Forum for Asia, IMF Managing Director Kristalina Georgieva said a more prolonged slowdown in China would have a spillover impact globally.

Coronavirus cases remained high, showing few signs of a turning point despite stringent virus control measures. Mainland China reported 19,458 new infections for Wednesday, compared with 19,927 new cases a day earlier.

Meanwhile, markets ignored news on a private pension scheme that will potentially channel more long-term money into the stock market.

Most sectors fell, with tourism and new energy leading the decline down more than 4% each.

Among individual stocks, CNOOC surged as much as 44% in Shanghai debut, as investors sought safety in the oil giant amid lofty energy prices and quickening inflation.

China’s yuan weakened to a more than six-month low against the dollar, breaching a key threshold, after the central bank set a weaker daily midpoint, as corporate dollar buying and expectations of US policy tightening supported the greenback.

The yield gap between China’s benchmark 10-year government bonds and their US counterparts hovered in negative territory and at lowest levels since 2010.

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