China's main stock indexes fell on Tuesday, dragged lower by property and tech shares, as investors took profit from the previous session's more than 1 percent rally. The bluechip CSI300 index fell 0.4 percent, to 3,218.45, while the Shanghai Composite Index lost 0.3 percent, to 3,023.65 points. Chinese Premier Li Keqiang said on Monday that the country's economy has shown more positive signs but downward pressures still persist, vowing to take steps to deal with overcapacity.
Signs of an improving economy have helped fuel a six-month rally in Chinese stocks, but with the main index having rebounded about 14 percent from its February low, investors are getting cautious. Mainland stocks fell across the board, led by IT, telecommunications and property shares. Small caps were also among the biggest decliners, with Shenzhen's start-up board ChiNext falling more than 1 percent. "We could be near the end of the rebound, because encouraging first-quarter data has been largely priced in, but whether the economic recovery is sustainable is a big question mark," said Wang Mingli, strategist at Guoyuan Securities.
He said another bout of panic-selling could not be ruled out in the following months, something that could be triggered either by disappointing economic data in the second quarter, or even external factors such as renewed volatility in currency markets. But resource shares were little changed, as Premier Li reiterated that the government would quicken reforms to eliminate outdated capacity in coal and steel sectors and use "market-based" debt-to-equity swaps to help lower firms' debt levels. In contrast, Hong Kong shares were upbeat. All main sectors, with the exception of IT were in positive territory.
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