Address

Precise Investors

Stocks & Shares

Chinese stocks drop on stimulus upset

Chinese tech stocks

Shanghai declined more than 3%, while Hong Kong collapsed more than 9%

Stocks in mainland China and Hong Kong dropped on Wednesday in a volatile start a day after Beijing left investors disappointed over a lack of fresh stimulus and scant detail on its plans for implementing a raft of measures already unveiled.

After blockbuster performances in the wake of last month’s announcements to kickstart growth, traders were left deflated Tuesday after a news conference that fell short of expectations and revived concerns over the outlook.

A rally on Wall Street, helped by a dip in oil prices and optimism over the US economy, did little to lift sentiment on Chinese trading floors, though most other markets in Asia gained.

Investors are now keeping tabs on developments out of Beijing, hoping for more indications about officials’ plans, though analysts warn there is unlikely to be the big “bazooka” stimulus similar to the support seen during the global financial crisis.

Shehzad Qazi at China Beige Book said the news conference underscored that Beijing does not feel the need to do ‘whatever it takes’.

Instead it is opting for targeting stimulus – including allocating funds for projects previously announced. The irony is markets would have continued rallying had there been no press conference, he said.

The only upside of (Tuesday’s) event was injecting a much needed dose of reality, he added.

Hong Kong had surged more than 20% between the first batch of measures being announced and Monday, but it collapsed more than 9% on Tuesday – its worst day since 2008.

It extended losses on Wednesday as traders struggled to get back on track.

Shanghai declined more than 3% – having seen a 10% opening rally on Tuesday pared to just more than 4%.

Still, most other markets in the region gained as investors took their lead from New York, where tech companies led the way on optimism over the U.S. economy in the wake of Friday’s forecast-topping jobs data.

Tokyo gained, with Seven & i Holdings – the owner of the 7-Eleven convenience store chain – adding nearly 5% after a report said Canada’s Alimentation Couche-Tard had raised its takeover offer for the firm by around 20% to $47.2 billion.

Sydney, Singapore, Taipei, Wellington and Jakarta also gained, though Manila slipped.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Precise Investors. The information provided on Precise Investors is intended for informational purposes only. Precise Investors is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

Leave a Reply