The Shanghai Composite index skidded 5.3%, while the blue-chip CSI300 index slipped 5.4%, both poised to snap a 10-day winning streak
Chinese stocks tumbled on Wednesday alongside their Hong Kong peers, as investors booked profits after a strong rally and as officials failed to inspire confidence in stimulus plans intended to revive the economy.
Benchmark indexes in China dropped more than 5% by midday in a sharp reversal from the moves seen the day before, when markets returned from the week-long National Day holiday and scaled more than two-year highs.
The Shanghai Composite index skidded 5.3%, while the blue-chip CSI300 index slipped 5.4%, both poised to snap a 10-day winning streak.
The A-share market, comprising stocks listed in Shanghai, Shenzhen and Beijing, had a roller-coaster ride on Tuesday, with turnover reaching a record 3.485 trillion yuan ($493.17 billion).
But gains were capped after officials fell short of delivering further details of Beijing’s massive stimulus measures at the highly anticipated National Development and Reform Commission (NDRC) press conference on Tuesday, leaving investors disappointed.
I would say the NDRC’s recent announcements were a bit disappointing, mainly because there wasn’t much in the way of new stimulus or clear forward guidance, according to Nori Chiou, investment director at White Oak Capital.
However, he said Wednesday’s pullback in stocks was hardly a letdown for many, given their strong run over the previous sessions.
Hong Kong’s Hang Seng index similarly stumbled 1.4%, though it remains one of the region’s best-performing markets this year following its steepest rally in a generation over recent weeks.
The Hang Seng Mainland Properties Index declined 4.7%, while technology shares lost 0.86%.
The market is widely anticipating a fiscal stimulus announcement sometime this month, something like 2-3 trillion yuan is the range being talked about, according to Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Tan said: The positive sentiment on China assets lately is premised on expectation of a major fiscal stimulus package, so that sentiment will turn quickly if we do not get some package at least matching the range above.