SHANGHAI: China stocks weakened on Tuesday morning on further signs of tightening liquidity conditions after the central bank refrained from injecting short-term funds into the banking system for the third session in a row. Hong Kong stocks followed Asian markets higher after Wall Street stabilized following the U.S. President Donald Trump’s healthcare reform debacle.
China’s blue-chip CSI300 index fell 0.2 percent, to 3,471.49 points by the lunch break, while the Shanghai Composite Index lost 0.3 percent, to 3,257.38 points. The People’s Bank of China skipped open market operations again on Tuesday, citing “appropriate” liquidity levels in the banking system as the reason not to inject funds.
The PBOC’s decision reinforces Beijing’s tighter monetary policy bias, which has pared risk appetite and offset the impact from recent upbeat economic data. “In the short term, neither bulls nor bears can get the upper hand,” Min Lizheng, analyst at Eastmoney Securities wrote. The government must balance the need to support the economy and ward off asset price bubbles, Min said. Most sectors fell, with transportation and consumer among the worst performers.
