China: Stocks down for 4th week on worries over economy, policy tightening

[SHANGHAI] China's main stock indexes fell on Friday to fresh three-month lows, posting their fourth weekly loss in a row, as lingering worries over economic growth and tighter regulations hurt risk appetite.

The blue-chip CSI300 index fell 0.6 per cent, to 3,382.55 points, while the Shanghai Composite Index dropped 0.8 per cent to 3,103.04 points.

For the week, CSI300 was down 1.7 per cent in its worst week this year, while the SSEC lost 1.6 per cent. "Obviously regulations are tightening and a large number of regulatory measures will come in the second half of the year, thus hurting sentiment," said Zhu Qibing, an analyst with BOCI Securities.

Manufacturing surveys out of China this week triggered worries the world's second largest economy may have peaked in the first quarter and could be starting to embrace a downward trend in the near term.

After years of super-loose policy, Beijing pledged to shift the emphasis to addressing financial risks and asset bubbles, and regulators have stepped up a crackdown on riskier forms of financing as authorities try to contain financial risks from years of debt-fuelled stimulus.

China's central bank injected 506.39 billion yuan (S$103 billion) into the financial system in April, down 18 per cent from the previous month, signalling a bid to rein in rapid credit growth.

Financials took the biggest hit from the tightening, with an index tracking those stocks slumping 2.5 per cent to a near nine-month low, notching its worst week year-to-date.

For the past week, resources shares were hard hit by sharp falls in oil and commodities prices, amid worries over slowing construction and infrastructure demand.

Sectors fell across the board on Friday, led by energy , financial and material stocks .

Despite the recent sharp correction, most analysts Reuters talked to saw little chances for a major downturn in the main stock indexes, given Beijing's intention to maintain financial stability and potentially peaking yet still solid economic indicators.

REUTERS