SHANGHAI: China stocks were flat at midday on Thursday, as strong gains in small-caps offset a survey showing softer services sector activity which raised concerns over growing economic risks. The CSI300 index was unchanged at 3,412.49 points at the end of the morning session, while the Shanghai Composite Index lost 0.1 percent, to 3,133.21 points. Growth in China’s services sector cooled to its slowest in almost a year in April as fears of slower economic growth dented business confidence, even as cost pressures eased, a private survey showed on Thursday. The findings echoed a similar trend of slowing growth seen in China’s official factory and services surveys on Sunday. “A turning point in growth appeared to have emerged at the beginning of the second quarter. Investors should be cautious about downward risks in the economy,” Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in a note.
Further curbing sentiment, the securities regulator on Wednesday vowed to step up efforts to prevent and control financial risks ahead of a key Party Congress later this year. Participants had already been rattled by tougher regulations recently to dampen market speculation, but Liu Qihao, an analyst with Shanghai Securities, said chances for a major downturn in the main indexes were low. Sector performance was mixed in the morning session. Small-caps outperformed the broader market, with the tech-heavy start-up board ChiNext rallying 0.8 percent. Stocks expected to benefit from the planned Xiongan New Economic Zone, an area modelled on the Shenzhen special economic zone, also bounced strongly, with more than 10 of those stocks surging 10 percent.”In the long run, the building of Xiongan Area would certainly help lift the results of those related listed companies, but for now it’s mainly short-term speculation,” said Liu.
