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Hong Kong - Chinese stocks headed for their lowest close in a month on the last trading day of this week amid speculation the central bank won’t add to stimulus.
The Shanghai Composite Index fell 0.6% as of 1:00. The gauge has lost 2.4% this week, the most since May, after plunging on Monday amid a jump in the cost of borrowing the yuan in Hong Kong.
Commodity producers paced losses in Shanghai after US oil prices slumped. The Hang Seng China Enterprises Index was little changed after the steepest two-day drop in seven months.
Monday’s tumble broke a calm that had persisted for weeks in mainland equities as a selloff in global markets added to concern about higher funding costs. Better-than-expected economic data on Tuesday fuelled speculation the central bank will hold off lowering borrowing costs.
"There’s uncertainty over policy, which is not good for market confidence," said Li Jingyuan, general manager at Shanghai Bingsheng Asset Management. "The tone of a loose monetary policy won’t change, but there’s no need to expand stimulus now."
The Shanghai Composite gauge fell to 3 006.02, near the 3 000 level where state-backed funds were speculated to have intervened in the past. China Petroleum & Chemical Corporation dropped 1.2%, the most since June 24, after US oil prices slumped 3% on Tuesday amid concern a global supply glut will persist.
Shandong Gold Mining Company headed for its lowest level in more than two months as a gauge of materials companies on the CSI 300 Index lost 0.7%.
Official figures released on Tuesday showed China’s data on industrial production, retail sales and fixed-asset investment all beat estimates.
The data may have increased uncertainty over the timing and strength of additional policy support, UBS Group economists led by Donna Kwok wrote in a note.
The Hang Seng Index rose 0.2% after dropping 3.7% in the previous two days. Casinos advanced, with Sands China climbing 1.8% after Chairman Sheldon Adelson said Macau’s gambling industry has hit bottom.
Parkson Retail Group surged as much as 68% after saying it’ll sell a Chinese subsidiary whose main asset was a loss-making department store in Beijing.
H-share discount
The Hang Seng China AH Premium Index slipped 0.6%, nearing its lowest level since 2014. Chinese shares in Hong Kong have outperformed their mainland counterparts this year, with the Hang Seng China Enterprises gauge slipping 1%, compared with a 15% loss for the Shanghai Composite.
Still, options traders are betting on a rebound for mainland Chinese shares. The cost of bullish contracts on the China 50 exchange-traded fund is near the highest level this year relative to bets that profit from a decline, data compiled by Bloomberg show.
There are expectations for the A shares to catch up with their Hong Kong peers, said Caroline Maurer, head of greater China equities at BNP Paribas Investment Partners in Hong Kong.
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