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China: Stocks fall as bond yields rise amid liquidity concerns

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[SHANGHAI] China stocks fell the most in a week on Wednesday, partly driven by lingering concerns over tighter liquidity that pushed up treasury yields, with a correction in resources shares offsetting strength in the healthcare and consumer sectors.

The blue-chip CSI300 index fell 0.4 per cent, to 3,354.80, while the Shanghai Composite Index lost 0.5 per cent to 3,116.31 points.

Although yuan depreciation anxiety eased on Wednesday - the yuan is set to rise against the US dollar for the first time in five days - there are concerns about tighter liquidity as China's 10-year treasury yields rose for the third day.

Higher bond yields - a sign of tighter liquidity - is partly linked to news of tighter regulatory scrutiny over bank's wealth management products - a major source of funding for the bond market.

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Market voices on:

China's central bank will take into account off-balance sheet financing at commercial banks to assess their overall financial health, three sources told Reuters.

Coal miners pulled back after strong rallies recently on the back of higher coal prices. Energy shares also dropped.

But an index tracking the healthcare industry was firm on hopes earnings will pick up after Beijing published a blue-print for the industry with the aim of growing the sector to 16 trillion yuan (S$3.3 trillion) by 2030.

REUTERS

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