July 27, 2016 / 5:11 AM / 2 years ago

China stocks fall 2 pct as speculators bail out of concept stocks

* CSI300 -2 pct, SSEC -2.1 pct

* His -0.1 pct, HSCE -0.2 pct

SHANGHAI, July 27 (Reuters) - China stocks fell sharply on Wednesday as investors took profits from recent gains and as speculators ejected from hot “concept stocks” following a regulatory crackdown.

The CSI300 index fell 2 percent to 3,203.5 points by early afternoon, while the Shanghai Composite Index lost 2.2 percent, to 2,983.9.

China CSI300 stock index futures for August fell 2.0 percent to 3,173.2, -44.97 points below the current value of the underlying index.

“Investors believe there will no monetary easing any time soon,” said Xiao Shijun, analyst at Guodu Securities in Beijing.

“That means the market lacks a driving force while there is also no other major news around the corner.”

Another factor at play was an apparent withdrawal from hot concept stocks which rose sharply earlier in the week.

The Shenzhen Stock Exchange announced on Monday it would require greater disclosure from companies experiencing sharp, unexplained movements in their share values, which in the past has been associated with insider trading and market manipulation.

Analysts pointed out sharp moves in some technology stocks.

For example, Fangda Carbon New Materials and Deluxe Family suddenly became some of the most highly traded shares on the Shanghai Stock Exchange in recent days. Both companies rose by their maximum allowable 10 percent on Monday and volumes hit their highest levels since December.

Domestic social media speculated that the rise in carbon-related stocks was driven by speculation about new investment into the sector, but after the Shenzhen announcement their share prices have begun to retreat.

Others speculated that unconfirmed media reports about a pending crackdown on shadow banking products were dinging shares in the Chinext Index, which was down 4.8 percent.


In Hong Kong, the Hang Seng index slipped 0.1 percent to 22,098.45, while the Hong Kong China Enterprises Index lost 0.2 percent to 9,040.41.

The index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 127.47.

A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.

The northbound quota for the Hong Kong-Shanghai Stock Connect, currently set at 13 billion yuan, saw net inflows of 0.53 billion yuan.

Reporting by Lu Jianxin, Liu Luoyan and Pete Sweeney; Editing by Kim Coghill

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