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China: Stocks fall over 1% on Brexit; capital controls limit selling
[SHANGHAI] China stocks fell more than one per cent on Friday as Britain's vote to leave the European Union shocked global financial markets, but the country's tight capital controls curbed the sort of heavy selling which pummelled other Asian markets.
Both the blue-chip CSI300 index and the Shanghai Composite Index lost 1.3 per cent to 3,077.16 and 2,854.29 points, respectively.
For the week, both indexes lost 1.1 per cent.
Britain's vote for Brexit hammered equities across the world, prompting investors to scramble for safe-haven assets such as top-rated government debt, the Japanese yen and gold.
But the reaction from Chinese investors was relatively subdued, with some investors apparently taking advantage of the panic for bargain hunting.
Shenzhen's start-up board ChiNext slumped over 3 per cent but ended the session roughly flat.
"The mainland market is less sensitive (to Brexit)," said Charles Wang, chairman of Appleridge Capital Management Co.
But he added the Chinese market could still suffer from high volatility over the next few weeks.
ANZ said in a research note that although the Brexit result is unlikely to affect China's immediate economic outlook, the event "reminds us that we are still pencilling in one more additional RRR cut," referring to banks' reserve requirement ratio.
The People's Bank of China has cut interest rate six times and repeatedly lowered banks' reserve requirements since late 2014 in a bid to shore up the economy, while the government has sharply ramped up fiscal spending, particularly on infrastructure projects.