SHANGHAI: China stocks slumped for a sixth straight session on Monday, with small-cap companies leading the plunge, as investor pessimism worsened on the lack of a clear signal for policy support.
The blue-chip CSI300 Index tumbled as much as 2.1% to refresh a five-year low, while the Shanghai Composite Index slumped as much as 3.5%, after tumbling 6.2% last week.
The market extended losses after last week’s slump,“ said Yang Delong, chief economist at First Seafront Fund Management.
“And there are no signs of bottoming out or stabilising.”
Last week, the Shanghai stock benchmark witnessed its worst weekly performance since October 2018, leading many Chinese investors to vent their frustration and anger via social media, including a blog account of the US Embassy in Beijing.
Over the weekend, China’s securities regulator vowed to prevent abnormal market fluctuations, but announced no specific measures.
“The national team should step up efforts to rescue the market,” Yang said. “The market has reached a critical moment.” State-backed investors - dubbed the “national team”, have stepped up buying blue-chip funds to support the market in recent weeks, but so far have failed to arrest a slump.
China stocks end mixed on policy support
Adding to investor pessimism, recent economic indicators showed no signs of improving, and the International Monetary Fund on Friday projected that China’s economic growth would slow to 4.6% in 2024 and decline further in the medium-term with growth of about 3.5% projected in 2028.
Prices of small-and-micro cap stocks tumbled on Monday, with the CSI 1000 Index and the CSI 2000 Index falling 6.8% and 9.4%, respectively, in contrast with the blue-chip’s 0.1% decline by the midday recess.
The Hong Kong market remained relatively stable, with the Hang Seng benchmark down only 0.2%.
The broad Asian shares fell after a robust US jobs report dashed any expectations of a near-term interest rate cut from the Federal Reserve.
Geopolitical concerns also weighed on the market as the United States added more than a dozen Chinese companies to those it alleges are working with Beijing’s military, as part of a broader effort to keep American technology from aiding China.
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