Financials drag down stocks 2.2%
Print Edition
SHANGHAI stocks ended lower yesterday, dragged down by heavyweight financial stocks.
A deep decline in the last 10 minutes of trading sent the Shanghai Composite Index down 2.2 percent to close at 3,705.77 points. Trading turnover remained subdued at 616 billion yuan (US$99.2 billion).
The outstanding balance of margin loans fell for the third straight day on Wednesday to 1.37 trillion yuan on the Shanghai and Shenzhen bourses, the lowest in more than four months, data showed.
Margin lending is also decreasing in the gray market.
Vincent Chan, an analyst at Credit Suisse, said in a note that margin loans from informal lending channels are likely to have dropped sharply since mid-July when the China Securities Regulatory Commission started to crack down on the shadow lending market. Chan estimated that the amount could have decreased by 60 percent to 60 billion yuan.
“Investor sentiment is weak with continuous capital outflows,” Guangzhou Wanlong Securities Consulting Co said in a note yesterday. “However, the downside potential from the current level is limited as the government has pledged to support the market.”
Brokerages continued to fall as data showed their commission income fell 31 percent from a month earlier to 27.7 billion yuan in July amid tepid trading activity. CITIC Securities dropped 5 percent to 20.88 yuan. Haitong Securities slumped 5.2 percent to 17.28 yuan.
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