|
 Concerns about the Chinese economy mean stocks are down 6 percent so
far this week, with the drop exacerbated by thin trading volumes as
many investors opt to stay on the sidelines.
China's benchmark CSI300 index of the biggest listed stocks in
Shanghai and Shenzhen closed down nearly 4 percent on Tuesday, while
the Shanghai Composite Index dropped 3.55 percent to end at 3,004,
just above the psychologically important 3,000 mark.
The fall will be of dismay to Chinese policymakers trying to halt
the market slide, given that up until this week trade in September
had been relatively steady compared with the previous two tumultuous
months.
Chinese equity markets have dropped around 40 percent since mid-June
despite frantic attempts by the authorities to curb speculation and
pressure state-owned institutions to buy up stocks.
However, persistent doubts that China's economic growth this year
will meet the government's official forecast of 7 percent are
deterring many investors from re-entering the market.
Some retail investors who spoke to Reuters said they are waiting for
the Shanghai Composite index to go down to 2,500 before they start
buying again.
Small cap stocks have posted even larger falls, with the CSI300 IT
index down 7.4 percent on Tuesday and Shenzhen's growth board
ChiNext 5.3 percent lower.
"With a slim chance of making a profit in this market, money is not
coming in," said Zhou Lin, analyst at Huatai Securities.
Data showed heavy investor redemptions last month, with total net
assets of Chinese stock funds slumping 44 percent to 724.8 billion
yuan ($114 billion).
Investors' hesitation comes despite Beijing's attempts to revive
slowing economic growth by ramping up government spending. Data on
Tuesday showed fiscal expenditure in August was 25.9 percent higher
than a year ago.
The spending increase to 1.28 trillion yuan ($201 billion) was the
biggest percentage rise in central and local government fiscal
expenditure since April, when it leapt 33 percent, figures from the
Ministry of Finance showed.
[to top of second column] |
With traditional monetary policy responses such as interest rate
cuts having less impact in reviving economic activity than in the
past, China is trying to increase fiscal stimulus to shore up
short-term growth and fend off growing deflationary pressures.
Reuters reported exclusively on Monday that Chinese authorities had
seized 1 trillion yuan ($157 billion) from local governments in
unused budget allocations. Sources said the funds would be used to
pay for investments.
Data in the past week has pointed to a further cooling in the
Chinese economy in August, adding to expectations GDP growth in the
July-September quarter would be below 7 percent.
In the latest evidence of the impact of the economic slowdown,
Volkswagen and other major carmakers in China have started to rein
in production, wages and costs, industry sources said.
Still, Bank of Japan Governor Haruhiko Kuroda said on Tuesday he was
confident Beijing's measures would prove effective.
"China's economy has recently slowed, with (weakness seen) mainly in
the manufacturing sector. But it is expected to grow stably with
support from the authorities' fiscal and monetary measures," he said
at a news conference following the BOJ's decision to leave its
monetary policy unchanged.
(Additional reporting by BEIJING newsroom, Nathaniel Taplin and
Kazunori Takada in SHANGHAI, Andreas Cremer and Norihiko Shirouzu in
FRANKFURT; Writing by Rachel Armstrong; Editing by Neil Fullick)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
