China shares suffered their worst daily loss in almost four years on Monday, taking Hong Kong markets lower, with financials hammered on fears that the central bank would keep money tight and economic growth could slow sharply.
Despite money market rates easing for a second-straight session on Monday, mainland investors remained jittery about monetary conditions and braced for disappointment when the People's Bank of China conducts a scheduled open market operation on Tuesday.
The CSI300 of the top Shanghai and Shenzhen listings plunged 6.2 per cent. The Shanghai Composite Index dived 5.2 per cent as volumes spiked to the highest in about a month. Monday's losses were their worst since August 31, 2009.
The Hang Seng Index slid 2.2 per cent to 19,814 points, closing below the 20,000-point mark for the first time since September 11. The China Enterprises Index of the leading Chinese listings in Hong Kong tumbled 3.2 per cent to its lowest since October 2011.
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At $US10 billion, Hong Kong turnover was off Friday's three-month high, but was still some 20 per cent more than its average in the last 20 sessions. Short selling accounted for 13.6 per cent of total turnover, versus the 8 per cent historical average.
Late Monday morning, share-losses accelerated in rising volumes after the Chinese central bank described liquidity in the country's financial system as "reasonable", repeating what was said in a Sunday commentary in the official Xinhua news agency.
The commentary also said the latest spike in money market rates was a result of market distortions caused by widespread speculative trading and shadow financing. The central bank, in its quarterly report on Sunday, pledged to "fine tune" existing "prudent" monetary policy.
"I think the market is expecting 'fine-tuning' to mean a tightening of liquidity moving forward, especially after the way official media talked about shadow financing over the weekend," said Cao Xuefeng, Chengdu-based head of research at Huaxi Securities.
"People are quite jittery ahead of the first of two (PBOC) open-market operations for the week on Tuesday. In this market environment, it's tough to call a bottom, fears could spread about funding for companies," Cao added.
The weakness in the mainland markets also extended to the property and other growth-sensitive sectors. A Xinhua report that 30.9 billion yuan of shares could become tradeable further weighed on markets, a move that may potentially compete for already tight liquidity.
Among CSI300 component stocks, only four finished the day with gains. Poly Real Estate and Southwest Securities were among 15 CSI300 components that plunged by the maximum-allowed 10 per cent.
Warren Buffett-backed Chinese automaker BYD plunged 11 per cent in Hong Kong after CLSA analysts repeated their sell call. They see its share price down 80 per cent from Monday's close, believing its new F3 sedan has been launched too late.
Banks hammered
Monday's plunge came despite the overnight repo rate, a key measure of funding costs in China's interbank market, falling by more than two percentage points to 6.64 per cent on a weighted-average basis, its lowest since last Tuesday. It had peaked near 12 per cent last Thursday.
Among the biggest losers were smaller banks seen as more reliant on short-term interbank funding. The Shanghai financial sub-index skidded 7.3 per cent in its worst day since November 2008, during the financial crisis that started that year.
Shanghai-listed China Minsheng Bank and Industrial Bank, along with Shenzhen-listed Ping An Bank all plunged by 10 per cent. Minsheng's Hong Kong listing skidded 8 per cent in its worst day since October 2011.
Minsheng shares, some of the most popular in both markets earlier this year, are now down 40 percent from a peak in January. They are down 19.4 per cent on the year, compared to the 22 per cent slide for the H-share index.
Among the "Big Four" Chinese banks listed in Hong Kong, Agricultural Bank of China (AgBank) and Industrial Bank of China (ICBC) had the biggest percentage losses, 2.9 and 3 per cent, respectively.
Reuters
Read more: http://www.smh.com.au/business/markets/worst-day-in-four-years-for-china-shares-20130624-2osyz.html#ixzz2XB05LY8W
Index Profile Information for SHCOMP
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listedon the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down by a factor of 1000.
Top Gainers & Losers In SHCOMP
| TOP GAINER | % Change |
|---|---|
| YUD Yangtze River In... | +10.09% |
| Inner Mongolia Junzh... | +10.03% |
| Henan Ancai Hi-Tech ... | +6.99% |
| Sinopec Shanghai Pet... | +5.04% |
| Sinopec Yizheng Chem... | +5.02% |
| Beijing Capital Tour... | +4.35% |
| Liaoning Shidai Wanh... | +4.29% |
| Angel Yeast Co Ltd | +4.03% |
| Xi'An Hongsheng Tech... | +3.35% |
| Tianjin Benefo Tejin... | +2.59% |
| TOP LOSER | % Change |
|---|---|
| Shanghai Jinjiang In... | -10.45% |
| Guizhou Guochuang En... | -10.09% |
| Shaanxi Qinling Ceme... | -10.08% |
| Shanghai Tianchen Co... | -10.07% |
| Tianjing Global Magn... | -10.07% |
| Wintime Energy Co Lt... | -10.06% |
| Huafa Industrial Co ... | -10.06% |
| Hainan Island Constr... | -10.05% |
| Shuangliang Eco-Ener... | -10.05% |
| Anhui Liuguo Chemica... | -10.04% |
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