China stocks dragged down by banks on wealth management crackdown
* CSI300 -0.4 pct, SSEC -0.6 pct
* HSI -0.4 pct, HSCE -0.7 pct
SHANGHAI, July 28 (Reuters) - Chinese stocks fell on Thursday, extending sharp losses in the previous session, as investors sold financials on news that regulators are planning a crackdown on wealth management products to curb risks to the banking system.
China is considering restricting investments by small banks in the rapidly growing $3.5 trillion wealth management product (WMP) industry, draft rules seen by Reuters showed, as concerns grow that they are taking increasing risks.
The curbs could include capping their investment in the stock market.
That made for a rough trading day on Wednesday, with benchmarks dropping over 3 percent in mid afternoon before recovering slightly.
"The move is expected to slow cash inflows into the stock market, although details of how the curbs will be implemented are still void," said Zhang Qi, senior analyst at Haitong Securities in Shanghai.
"Faced with the uncertainty, share prices may have the potential to fall further in near term, but the room should be limited as the funds to be restricted are also seen limited."
The CSI300 index fell 0.4 percent to 3,204.89 points at the end of the morning session on Thursday, while the Shanghai Composite Index lost 0.6 percent to 2,973.59. Continuación...