BEIJING: China’s stocks dropped, trimming earlier losses as traders gauged government support for the equity market amid concern a slowing economy and weaker yuan will spur capital outflows.
The Shanghai Composite Index fell 0.4 percent to 3,779.10 at the 11:30 a.m. local-time break, led by health-care and industrial companies. The measure earlier fell as much as 2.2 percent. Volume was 25 percent lower than the 30-day average for the time of day. Hong Kong’s Hang Seng Index dropped as much as 2 percent, taking its decline from its April 28 high to more than 20 percent, which some traders consider the start of a bear market.
“Many investors are waiting until there are clear signs of stabilization in the market before making significant investments,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “There are no obvious positive triggers in the short term, either from a fundamental or policy angle.”
Speculation about the level of government intervention in Chinese stocks has increased since the securities regulator indicated late Friday that the state will reduce buying and data showed the richest traders were cashing out. China’s central bank this week injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash in the financial system.
