Shanghai - Chinese stocks headed for their first weekly decline in a month, sending a measure of price swings to its lowest level since 2014, as consumer and energy companies retreated.
The Shanghai Composite Index declined 0.7% to 3 018.13 at 06:10, taking losses this week to 1.2%. Spirits maker Luzhou Laojiao paced consumer staples lower, while Yanzhou Coal Mining led energy companies down amid concern US crude’s recent drop below $45 a barrel will weaken demand for alternative fuels such as coal. The Hang Seng Index decreased after entering a bull market on Thursday.
Friday’s decline comes amid easing volatility for the Shanghai Composite, which has traded in a narrow range around the 3 000-level over the past two weeks. A measure of the gauge’s 30-day price swings fell to the lowest level since 2014, suggesting the market may be taking a breather after stocks rose in the previous three weeks.
“The market faces some profit-taking pressure after surpassing the 3 000 point level and is undergoing a short-term correction as there’s no immediate catalyst,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai. “The government wants to keep the market stable and doesn’t want to see lots of stocks decline.”
The CSI 300 Index slipped 0.6%. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong lost 0.5%, while the Hang Seng Index slipped 0.5%, paring a second weekly advance.
Consumer staples
Gauges of Chinese consumer-staples and energy stocks lost at least 0.9%. Luzhou Laojiao retreated 2.4%, trimming this year’s gain to 12%. Kweichow Moutai dropped 1.8%, while Jiangsu Yanghe Brewery Joint-Stock slid 2%.
In Hong Kong, Tingyi (Cayman Islands) slid 3.1% and Want Want China slipped 1.2%. Bearish wagers on the two stocks soared to record highs since May amid concern China’s shift toward an economy driven by middle-class spending will leave some consumer companies behind.
Yanzhou Coal retreated 2.5% in Shanghai and Shaanxi Coal Industry slid 2.3%. PetroChina lost 0.5% as crude oil traded near a two-month low.
CGN Power tumbled 4.2% in Hong Kong, heading for its biggest loss in six weeks, and China Shenhua Energy sank 2% after their parent companies said they haven’t held discussions on a merger.
Bloomberg News reported Thursday that Shenhua had submitted a proposal to government regulators about a possible tie-up with China General Nuclear Power.
Margin traders increased holdings of shares purchased with borrowed money for a fourth day on Thursday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising to 487.5 billion yuan ($73 billion), the highest since May 9.