Shanghai, Hong Kong stocks slip amid weak sentiment
Analysts said sentiment was hit by worries over China's slowing economy, falls in global markets.
SHANGHAI (AFP) - Shanghai and Hong Kong stocks closed down after volatile trading on Wednesday gripped by ongoing concerns over China s economic crisis that has rattled world markets.
The benchmark Shanghai Composite Index edged down 0.20 percent, or 6.45 points, narrowing early sharp losses to close at 3,160.17 on turnover of 423.3 billion yuan ($66.5 billion). The bourse slumped as much as 4.66 percent but also sat 0.88 percent higher during the day.
The Shenzhen Composite Index, which tracks stocks on China s second exchange, lost 1.98 percent, or 33.83 points, to 1,673.95 on turnover of 325.5 billion yuan.
Hong Kong s benchmark Hang Seng Index fell 1.18 percent, or 250.49 points, to close at 20,934.94 on turnover of HK$96.05 billion (US$12.39 billion) after swinging in and out of positive territory through the day.
Analysts said sentiment was hit by worries over China s slowing economy, falls in global markets and questions over the level of state support for stocks.
"The government seems to have been buying blue-chips these days to support the market but investors have lost confidence amid the ongoing deleveraging and the overnight global rout," Wu Kan, a Shanghai-based fund manager at JK Life Insurance, told Bloomberg News.
Some investors had speculated that the government would not allow the market to fall sharply ahead of Thursday s commemoration of the 70th anniversary of victory over Japan and the end of World War II. Markets will be closed for two days for the holiday with trading resuming on Monday.
The government has already launched a rescue package to prop up the market, which includes funding state-backed China Securities Finance Corp. (CSF) to buy shares, but investors worry the government will reduce its intervention.
Still overvalued
Global stock markets plunged on Tuesday on the evidence of the slowdown in China s economy -- the world s second largest -- which triggered sell-offs on US and European exchanges.
The Chinese government said Tuesday that its Purchasing Managers Index (PMI) of manufacturing activity came in at 49.7 last month, its lowest for three years.
Analysts said the mood was also soured by an apparent renewed crackdown on funds used for margin trading -- by which investors use borrowed funds to trade on the markets with only a small portion of money put down as deposit.
"Shares are still overvalued," Daniel So, a strategist at CMB International Securities in Hong Kong, told Bloomberg. "Downside risks are larger than upside potential."
Trading on China s stock markets has been extremely volatile for the past two months, after a 150 percent rally over the previous year collapsed from its peak in mid-June.
The state-owned China Securities Journal reported on Wednesday that securities firms were transferring more funds to the CSF to help stabilise the market, with the additional amount estimated at more than 30 billion yuan ($4.7 billion).
Analysts estimate the Chinese government has spent hundreds of billions of dollars to prop up stock prices.
Brokerages were lower in Shanghai. Citic Securities fell 2.11 percent to 14.87 yuan and Northeast Securities eased 1.03 percent to 11.56 yuan.
Pharmaceutical firms were also among the losers. Shanghai-listed Zhejiang Chimin Pharmaceutical dropped 8.70 percent to 18.37 yuan, while Shenzhen-listed Hubei Guangji Pharmaceutical fell its 10 percent daily limit to 10.59 yuan.
In Hong Kong, HSBC dropped 1.82 percent to HK$59.40, while China-based insurance company Ping An fell 0.81 percent to HK$36.85.
Hong Kong s stock exchange will be closed on Thursday for a public holiday.
