April 23, 2019 / 7:33 AM / 3 months ago

Concerns on pace of policy easing drag China shares lower

SHANGHAI, April 23 (Reuters) - Chinese shares ended a volatile session lower on Monday, extending sharp declines from the previous session, as investors worried that Beijing could slow the pace of policy easing following a stronger-than-expected economic performance. ** At the close, the Shanghai Composite index was down 0.51 percent at 3,198.59. The index flirted with gains throughout the day, rising as much as 0.5 percent in early afternoon trade. ** The blue-chip CSI300 index was down 0.16 percent after earlier gaining as much as 0.9 percent. Despite the decline in the broad index, the financial sector sub-index ended 0.45 percent higher, the consumer staples sector closed up 1.38 percent, the real estate index gained 0.46 percent and the healthcare sub-index finished up 0.2 percent. ** Tuesday’s losses come after the CSI300 and Shanghai Composite both recorded their biggest single-day drop since March 25 on Monday. For the week, the CSI300 is down 2.5 percent and the Shanghai Composite has lost 2.2 percent. ** The smaller Shenzhen index ended down 1.32 percent and the start-up board ChiNext Composite index was weaker by 0.808 percent. ** China should fine-tune monetary policy “in a timely and pre-emptive way based on economic growth and changes in price situations,” the official Xinhua News Agency said on Monday, citing a top-level meeting chaired by President Xi Jinping. The report echoed comments from the Politburo, State Council and central bank in the past two weeks. ** Data released last week showed China’s economy expanded at a steady 6.4 percent pace in the first quarter, defying expectations for a further slowdown, with industrial output, retail sales and investment in March all growing faster than expected following a raft of growth-boosting measures rolled out in recent months. ** “A-shares investors tend to be more sensitive to shifts in monetary policy tone. Easing of monetary stimulus could lead to a sentiment swing to the downside, in our view,” Gao Ting, head of China Strategy, UBS Securities, said in a note. “On the other hand, stronger-than-expected inflow induced by MSCI A-share inclusion is an upside risk to the onshore market.” ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.04 percent, while Japan’s Nikkei index closed up 0.19 percent. ** At 0715 GMT, the yuan was quoted at 6.7139 per U.S. dollar, 0.03 percent weaker than the previous close of 6.7122. ** The largest percentage gainers in the main Shanghai Composite index were MeiDu Energy Corp, up 10.08 percent, followed by Guangdong Meiyan Jixiang Hydropower Co Ltd , gaining 10.06 percent and CTS International Logistics Corp Ltd, up by 10.05 percent. ** The largest percentage losses in the Shanghai index were Eastern Gold Jade Co Ltd down 10.06 percent, followed by Lifan Industry Group Co Ltd losing 10.04 percent and Anyuan Coal Industry Group Co Ltd down by 10.03 percent. ** So far this year, the Shanghai stock index is up 28.3 percent and the CSI300 has risen 33.5 percent, while China’s H-share index listed in Hong Kong is up 15.3 percent. Shanghai stocks climbed 3.49 percent so far this month. (Reporting by Andrew Galbraith, Editing by Sherry Jacob-Phillips)

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