BEIJING: China’s shares fell and bank shares pressured Australia on Thursday, but Japan’s market rose ahead of a key jobs report in the U.S. later this week.
The Shanghai Composite Index SHCOMP, -0.89% was ended 0.9% lower at 3661.54 and the smaller Shenzhen Composite 399106, -0.69% shed 0.7% to 2113.65 as investors continue to assess the level of regulators’ commitment to support mainland stocks. China’s main stock index is 29% off its mid-June peak and has fallen 11% since July 23.
Hong Kong’s Hang Seng Index HSI, -0.57% closed 0.6% lower, and a gauge of Chinese companies listed in the city fell 0.3%.
On Thursday, fresh worries emerged that China’s stock regulator might start approving firms’ share-placement applications as early as this Friday. The prospect of new shares could prompt investors to withdraw cash from existing positions, stoking further instability.
“The fact that the regulator didn’t deny [local media reports of the timeline] last night confirmed investor concern, thus dragging down the market,” said Zhang Gang, an analyst at Central China Securities.
Still, the backdrop that Beijing will continue to buy shares to prop up the market remains. Goldman Sachs analysts estimate that the Chinese government has spent up to 900 billion yuan ($144.9 billion) to support the stock market, equivalent to 1.6% of the market’s total capitalization and 2.2% of its free float size, or the amount of freely tradable shares.
“We believe authorities including the [central bank] are also likely to inject further liquidity if needed,” the firm wrote in a research note. “It is too early for them to reverse course, especially given the still-skittish manner in which the market is trading.”
