China stocks tumble as gold shares drag; still set for monthly gain

HONG KONG: China and Hong Kong stocks tumbled on Friday after a sharp drop in gold prices sparked a broad-based selloff across the markets, while state media warned against speculative trading.

• By the midday break, the Shanghai Composite Index declined 1.2% to 4,108.46, after losing as much as 2.2% earlier in the day.
• The blue-chip CSI 300 Index was down 1% after an earlier drop of as much as 2.2%.
• Losses were spread across the board, with gold-related shares seeing the biggest selloff after a sudden retreat in bullion prices from record highs.
• Sentiment was further dented after the state-owned Securities Times warned against the rally, while regulators including the Shanghai Gold Exchange announced news measures such as raising margin requirements to curb speculation.
• “The regulatory authorities’ timely intervention is aimed at preventing potential risks from an overheated market,” the newspaper wrote.
• “For ordinary investors, it’s better to view it rationally rather than blindly chasing higher prices.”
• The CSI SSH gold equity index and the CSI SWS non-ferrous metal index both tumbled roughly 8.7%.
• Miner Chifeng Gold, Shandong Gold and Zhongji Gold all plunged by their daily trading limit of 10%.
• Among other losers, the rare earth index lost 6.5% and the liquor distillers weakened 2.9%.
• The property sector weakened 3.4%, paring the sharp rally on Thursday after China reportedly dropped the borrowing limits on developers known as its “three red lines” policy.
• Despite the declines on Friday, the Shanghai benchmark was up 3.5% so far in January, heading for its best monthly gain since August.
• The blue-chip CSI 300 Index has climbed 1.6% for the month.
• In Hong Kong, the benchmark Hang Seng Index slid 1.8% to 27,469.82, and the Hang Seng Tech Index also weakened 1.8%.
• The Hang Seng Materials index tumbled 8.3%. Shares of Zijin Mining dropped 8.6%.