SHANGHAI: China’s stocks declined for a fourth day, sending the benchmark index toward its sharp weekly loss since April, as industrial companies dropped before this weekend’s manufacturing data.
The Shanghai Composite Index slipped 0.2% to 3,256.85 at 10:27am, extending this week’s loss to 2.8%. The four-day loss is the longest since November’s interest-rate cut. After a 37% rally in the fourth quarter, the Shanghai index lost momentum this month as the government took efforts to cool the growth of margin loans.
CSR Corp. and China CNR Corp. lost more than 5% after Huatai Securities Co. said it would stop lending shares of the train makers for short-selling. Leshi Internet Information and Technology Co. slid 3%, paring this month’s rally to 52%. Flat-panel television maker Hisense Electric Co. gained 10% after the China Securities Journal said it will ally with Tencent on smart TV games
Turnover sank 63% from its peak in December through last week, while new equity account openings fell 44% and purchases using borrowed money dropped 55%.
“The market is facing pressure from both the regulators, who have been cracking down on fast fund inflows into equities, and profit taking after the rally,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “Some investors are retreating after finding the market doesn’t present too many investment opportunities at this stage.” Margin trade The Shanghai measure has advanced 0.7% this month, compared with a 16% rally for the small-cap ChiNext Index. Small caps have benefited from rotation into technology and drug companies as regulators’ crackdown on margin trading damped the outlook for large caps. Margin traders increased holdings of shares purchased with borrowed money for a seventh day yesterday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising to 777.6 billion yuan ($124.5 billion). Hong Kong’s Hang Seng China Enterprises Index added 0.3% today, paring this month’s loss to 1.8%. The CSI 300 Index slipped 0.1% and the Hang Seng Index added 0.1%. The Bloomberg China-US Equity Index, the measure of the most-traded US-listed Chinese companies, added 0.3% in New York on Thursday. The Shanghai index has gained 59% over the past year, making it the best performer among 93 global indexes tracked by Bloomberg, amid speculation the central bank will ease monetary policy to support the economy. China’s gross domestic product (GDP) rose 7.4% in 2014, the slowest full-year pace in 24 years, as a slump in commodity prices and a property downturn weighed on the economy.
