SHANGHAI: China stocks sank on Monday morning amid worries over tighter liquidity as 23 companies are poised to sell shares publicly this week, potentially locking over 3 trillion yuan ($478.84 billion) of capital.
The decline was led by brokerages, which slumped after China’s securities regulator said it is considering issuing brokerages licenses to banks, a move that will intensify competition.
But Shenzhen’s ChiNext, the Nasdaq-style board for high-growth start-ups, resumed its upward momentum, rising 1.5 percent as investors shift money out of bluechips into small plays, despite their lofty valuation.
“You cannot just look at price-earnings ratios; you need to look at growth,” said David Dai, Shanghai-based investment director at Nanhai Fund Management Co Ltd.
The CSI300 index fell 1.3 percent in morning trading while the Shanghai Composite Index lost 0.9 percent.
The Hang Seng index dropped 0.8 percent, tracking falls in other regional bourses after strong U.S. jobs data sparked expectation that the U.S. Federal Reserve may raise interest rates sooner rather than later.
