Stocks in mainland China retreated from a three-day advance as commodity prices eased and lingering concerns about global inflation soured appetite for risks. Financial markets in Hong Kong were closed for a public holiday.
The Shanghai Composite Index fell 0.5 per cent to 3,510.96 at the close of Wednesday trading, after a rally this week that lifted the gauge to the highest level in 11 weeks. The Shenzhen Composite Index climbed 0.2 per cent, while technology-heavy ChiNext rose 0.8 per cent.
China Oilfield Services fell 4.9 per cent to 15.35 yuan while China Coal Energy lost 5.7 per cent to 7.40 yuan. Aluminium Company of China fell 3.1 per cent to 5.28 yuan. Prices of crude, aluminium and copper fell from their highs in recent trading.
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Among other key movers, the world’s most valuable liquor distiller Kweichow Moutai fell 0.5 per cent to 2,049 yuan. China Tourism Group Duty Free added 2.7 per cent to 326.52 yuan. Ping An Insurance dropped 1.3 per cent to 69.97 yuan.
Traders were also watching out on the fallout from a pump-and-dump scheme as market regulators started probing into stock manipulation involving a number of smaller companies in the nation’s US$11 trillion onshore markets, following revelations by a hedge-fund manager.
Eastern Pioneer Driving School, a Beijing-based firm which provides coaching services to drivers, slumped by the daily cap of 10 per cent. The stock is among a handful of companies implicated by the fund manager. Zoy Home Furnishing lost 2.6 per cent to 17.33 yuan, capping a 12.5 per cent alide within one week.
Elsewhere, the Biden administration delayed a China investment ban by two weeks on trading in a blacklist of companies deemed to have ties with the Chinese military. The ban was first initiated and later amended by ex-President Donald Trump’s executive order. Stocks on the blacklist were mixed.
Hangzhou Hikvision lost 1.1 per cent to 61.70 yuan in Shenzhen. Inspur Electronic Information Industry, a subsidiary of Inspur Group, declined less than 1.4 per cent to 27.23 yuan while China Railway Construction tumbled 0.7 per cent to 7.70 yuan in Shanghai. Dawning Information Industry fell less than 0.1 per cent.
“The drop in Shanghai index is an adjustment from the previous rapid rise,” said Yan Kaiwen, analyst at China Fortune Securities in Shanghai, who predicts the index to continue climb until mid-June. While the US deadline extension helped temper risk aversion, the performance of affected stocks would depend on related industry’s dynamics, he added.
The original deadline was first postponed to May 27 from January 28. The Treasury Department said US investors will be allowed to trade those securities until June 11. A review will look at whether the policies should be reworked, or even revoked.
Stocks on Wall Street declined overnight, with major gauges down. Investors were still concerned about the risks of rising inflation, which could lead to the Fed scaling back asset purchases.
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