BEIJING: China’s stocks fell for the steepest two-day loss in three weeks amid concern investors will continue to pull funds from the nation’s equities as data show a deepening economic slowdown.
The Shanghai Composite Index dropped 2.5 percent to 3,036.15 at the 11:30 a.m. break, led by material and industrial shares. The net value of mainland equity funds plunged 44 percent last month, while traders withdrew $15 million from the biggest U.S. exchange-traded fund tracking mainland stocks in the five days through Sept. 11, according to data compiled by Bloomberg. Yuan positions at the central bank and financial institutions fell by the most on record in August, a sign that policy makers stepped up intervention to support the currency.
“The economy has not shown signs of a pick-up after a series of cuts in
interest rates and reserve requirements, while expectations about yuan
depreciation are still there,” said Zhang Haidong, chief strategist at
Jinkuang Investment Management in Shanghai. “Yuan-denominated assets face downward pressure. The market is still weak.”
The Shanghai Composite plunged 2.7 percent on Monday after weekend data showed industrial output missed economists’ forecasts and investment in the first eight months increased at the slowest pace since 2000. The benchmark gauge has tumbled 41 percent from its June high to erase $5 trillion in value on mainland bourses as leveraged investors fled amid concerns valuations weren’t justified given the weakening economy. Margin debt in Shanghai slumped to a nine-month low on Monday.
