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STOCKS-CHINA
Chinese stocks tumble as trading resumes under a cloud
SHANGHAI, Oct 8, 2018 (BSS/AFP) – Chinese stocks tumbled Monday as
investors returned to a pile-up of negative news that accumulated over a
week-long holiday, from disappointing economic data to worsening tensions
with the United States.
The benchmark Shanghai Composite Index slid 3.01 percent, or 84.94 points,
in afternoon trade to 2,736.41.
The Shenzhen Composite Index, which tracks stocks on China’s second
exchange, fell 3.07 percent, or 44.24 points, to 1,397.30.
Chinese markets were already the world’s worst performing this year,
driven down largely by government attempts to rein in credit, and the
worsening trade fight with Washington.
But more bad news emerged while Chinese financial markets slumbered last
week.
Telecoms equipment maker ZTE led tech shares downward on Monday, falling
6.28 percent to 17.15 yuan after a Bloomberg News report that China had
inserted special microchips into computer goods exported to the US to steal
technology secrets.
The report, which raised the spectre of further US retaliation against
China, had already caused Chinese IT shares in Hong Kong to tumble on Friday.
Other Chinese tech stocks also suffered on Monday, with AI-focused
infotech company iFlytek dropping 3.36 percent to 27.61 yuan.
But shares also fell in a host of other sectors after two Chinese gauges
of manufacturing activity weakened in September and the US-China frictions
worsened.
US Vice President Mike Pence last week accused China of aggressive trade
and other policies and said Beijing was bent on interfering in upcoming US
elections.
US and Chinese naval ships had a close encounter at sea, and speculation
that the US could further hike interest rates rattled emerging markets.
“Export-oriented technology companies have seen the most obvious impact.
As the possibility increases that trade frictions could escalate into
political and military confrontation, global investors are more likely to
avoid the risks (of Chinese shares),” Guangzhou-based Wanlong Securities
Consultation Co said in a research note.
Shanghai-listed carmaker SAIC Motor plummeted 9.25 percent to 30.20 yuan
while BYD Automobile lost 3.77 percent to 47.26 yuan.
Consumer goods giant Kweichow Moutai, the world’s largest distiller, shed
4.12 percent to 699.90 yuan.
Ping An Insurance shed 4.60 percent to 65.35 yuan and China Pacific
Insurance dropped 3.18 percent to 34.43 yuan.
Chinese authorities had anticipated a sell-off when on Sunday the central
Bank announced it was cutting the amount of cash that lenders must keep in
reserve.
The reserve requirement ratio for most banks would be lowered by one
percentage point, effective on October 15.
It was the fourth time this year that China has sought to free up credit
for businesses — reversing the earlier drive to reduce debt — to help them
weather the US tariffs imposed on billions of dollars worth of Chinese goods.
BSS/AFP/HR/1325