The benchmark CSI 300 Index slid as much as 7.4%, wiping out the gain of 5.9% it made Tuesday. — Bloomberg
BEIJING: Chinese stocks listed onshore headed for their first decline in 11 days, as traders grew impatient with the pace of Beijing’s stimulus measures, with sentiment also hurt by weak holiday-spending data.
The benchmark CSI 300 Index slid as much as 7.4%, wiping out the gain of 5.9% it made Tuesday when mainland markets reopened after the Golden Week holiday.
The gauge pared losses after the Finance Ministry said it would hold a fiscal policy briefing on Saturday. An index of Chinese stocks listed in Hong Kong swung to a gain after dropping as much as 3.8% earlier.
While China’s markets rallied in recent weeks after a series of policy announcements designed to support the economy, enthusiasm over a stimulus-driven equity surge is cooling after the lack of any further major initiatives at a key policy meeting Tuesday.
A growing number of strategists and fund managers said Beijing needs to back up its spending pledges with real money, while others have cautioned the rally has gone too far too fast as benchmark indexes surged over 30% in a matter of days.
“The market is tussling between expectation for more stimulus and economic realities,” said Yi Wang, head of quantitative investment at CSOP Asset Management Ltd.
“Investors want to see a quick translation from stimulus measures into improving corporate earnings, better macro data – whether that’s with inflation, employment or local government debt. But there is a time gap between that expectation and the economic reality.”
Investors are starting to worry the rapid rebound in Chinese stocks since late September may prove to be yet another false dawn unless Beijing announces a strong fiscal package that can revive consumption and support the property sector.
The world’s second-largest equity market has had multiple boom-and-bust cycles. Confronted by slowing growth and disinflation, China swung into stimulus mode in late 2014, setting off a rally that crashed back to earth in mid 2015.
The Shanghai Stock Exchange Composite Index more than doubled its level from October 2014 to June 2015, but then plunged more than 40% in two months.
Returning from a weeklong break, Chinese stocks began Tuesday’s session with a bang – the CSI 300 surged 11% at the open. But the enthusiasm faded as officials at the National Development and Reform Commission stopped short of announcing any more large stimulus measures.
“The authorities are expressing a degree of discomfort with the market’s euphoria,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore. — Bloomberg
