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China's stock slump deepens on tariff concern; Tencent tumbles
[HONG KONG] Chinese equities extended their declines on Thursday, as concern over a trade dispute with the US continued to weigh on some of the worst-performing stock indices in the world this year.
The CSI 300 Index fell 2.9 per cent as at 1.58pm, extending Wednesday's 2 per cent decline. The Shenzhen Composite Index slid 3.5 per cent to head for its lowest close since February 2015. Tencent Holdings Ltd tumbled 3.2 per cent for a six-day loss of 9.5 per cent. That weighed on the Hang Seng Index, which fell for a fourth day.
"The trade issue continues to evolve and weigh on the market," said Shen Zhengyang, a Shanghai-based analyst with Northeast Securities Co. "It's a dilemma for China now, as it would put itself in a passive position if it doesn't fight back, while counteractions could cause damage to both sides."
The CSI 300 gauge of large mainland-listed companies is down 24 per cent from a Jan 24 peak. Equities have been battered by concern about the US trade rift, a slowing Chinese economy, weaker yuan and Beijing's deleveraging efforts.
The Trump administration is weighing whether to increase proposed tariffs on US$200 billion of Chinese goods to 25 per cent from 10 per cent. China has responded by warning the US against "blackmailing and pressuring" it over trade and vowed to fight back if tariffs were increased. Chinese policymakers on Tuesday signalled they will focus more on supporting economic growth, saying the external environment had "significantly changed".
"Investors were expecting obvious easing from the Politburo meeting, but the tone was more conservative," said Zhang Gang, Central China Securities strategist in Shanghai. "Also, there have been worries over the escalation of the trade war between China and the US. As long as there are uncertainties surrounding the trade war, investors will continue to sell their holdings."
The yuan was little changed at 6.8168 per dollar.
Measures of consumer and tech shares were among the worst performers of the CSI 300 gauge's 10 subgroups. Kweichow Moutai Co, a favourite of investors and analysts, fell 2.8 per cent, despite reporting a 40 per cent increase in first half net income on Wednesday. Macau casino stocks plunged in Hong Kong after Wynn Resorts Ltd reported declines in profit and revenue.
Along with the Shenzhen Composite's slide, the ChiNext gauge of small caps and tech stocks slid 2.9 per cent. Mr Zhang said investors were worried that the first-half earnings of small caps could be worse than expected.
Hangzhou Hikvision Digital Technology Co and other stocks linked to China Electronics Technology Group Corp slumped after CETC appeared on a US list of Chinese companies potentially posing security risks. The US Department of Commerce said 44 entities on the list will need additional licence requirements on all exports, re-exports and transfers of any US-origin items.
Here are some more highlights:
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Tencent Flashes Oversold Signal for First Time Since 2016: Chart
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China Central Bank Is Said to Step Up Effort to Spur Lending (2)
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What Analysts Are Saying About Equities: China Research Digest