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HK, Shanghai stocks slump on Chinese economy fears

HK, Shanghai stocks slump on Chinese economy fearsHONG KONG: Hong Kong and Chinese stocks tumbled on Tuesday, with Shanghai equities posting their biggest fall in three weeks on worries over China’s slowing economy and Beijing’s commitment to prop up shares.

Hong Kong’s benchmark Hang Seng Index lost 1.43 percent or 339.68 points to end the day at 23,474.97 on turnover of HK$ 80.83 billion (US$ 10.42 billion).

Shanghai closed down more than six percent — its biggest daily loss since July 27 — as traders bet Beijing will hold fire on more economic and market stimulus.

“The market lacks the momentum to go up. There is no major positive news” on the economy, Shen Zhengyang, an analyst at Northeast Securities, told AFP.

“In the short term, the market will fluctuate on the weak side,” he said, referring to Shanghai shares.

The benchmark Shanghai Composite Index slumped 6.15 percent, or 245.51 points, to 3,748.16 on turnover of 722.5 billion yuan ($ 112.9 billion).

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, ended down 6.58 percent Tuesday, or 153.07 points, at 2,174.42 on turnover of 667.3 billion yuan.

A slowing economy and a surprise currency devaluation last week have spooked investors in China, even after authorities on Friday pledged to stabilise stocks for several years.

State-backed China Securities Finance Corp. (CSF), tasked with supporting shares after a rout in mid-June wiped some four trillion yuan off Shanghai, will intervene whenever the market faces “systemic risk,” the regulator said.

But some investors were still sceptical that would be enough to support equities.

“Investors ran for the exit when the government failed to step in to support the market,” Steve Wang, chief China economist at Reorient Financial Markets, told Bloomberg News.

“The CSF has become a main player in this market so everyone is watching it. People panic when it stops buying.”

Dealers were also unnerved on Tuesday by news an improving property market could reduce the chances that Beijing will unleash further economic stimulus.

Railway-related firms were among the biggest losers in Shanghai. China Railway Erju plunged by its 10 percent daily limit to 14.90 yuan, while China Railway Construction slid 9.87 percent to 16.16 yuan.

Tianjin-linked firms fell after an explosion last week in the port city which killed at least 114 people.

Shanghai-listed Tianjin Port slumped by its 10 percent daily limit to 12.73 yuan and Shenzhen-listed Tianjin Binhai Energy and Development also lost 10 percent to 18.20 yuan.

In Hong Kong, Chong Hing Bank fell 9.33 percent to HK$ 20.90 on the first day of trading after releasing mixed results and announcing a discounted HK$ 3.71 billion rights issue.

The world’s largest personal computer maker Lenovo lost 5.81 percent to HK$ 6.81 after it started making smartphones in India through contract manufacturer Flex.

Copyright AFP (Agence France-Presse), 2015

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