China’s stocks fell in volatile trading, after an underwhelming press conference by the country’s economic planner poured cold water on two weeks of frenzied market activity, raising questions about the strength and durability of the world’s biggest market rally.
The Hang Seng Index retraced 1.6 per cent to 20,579.68 at 11.30am local time in Hong Kong, after starting the day 1.2 per cent higher. The benchmark plunged 9.4 per cent a day earlier, suffering its worst one-day percentage decline since 2008.
The CSI 300 Index, which tracks the biggest stocks listed on the Shanghai and Shenzhen exchanges, tumbled 5.4 per cent, erasing some of yesterday’s 5.9 per cent rally. All 10 industry groups in the gauge suffered losses. A drop would be the first setback for onshore equities following a US$3.5 trillion surge in the past 11 days.
China’s world-beating stock rallies are showing signs of exhaustion, as Beijing failed to deliver more goodies when markets reopened after the “golden week” holiday on Tuesday. Some analysts are worried the gains have come too much too soon, while the nation’s top planning body failed to offer fresh fiscal measures that investors said are needed to shore up the ailing economy.
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Boom or bust: how sustainable is China’s stock frenzy?
Boom or bust: how sustainable is China’s stock frenzy?
“While investors have reason for cautious optimism, much will depend on the size and implementation of the various measures, details of which are still pending,” said Seema Shah, chief global strategist of Principal Asset Management. “A well-targeted fiscal stimulus, aimed at rejuvenating the property sector and reviving animal spirits, could significantly improve China’s economic prospects.”
