Shanghai shares extend heavy losses
Print Edition
SHANGHAI stocks yesterday slumped again on renewed concerns over China’s economic growth following weaker-than-expected trade data and a report by the People’s Daily saying a huge stimulus to boost the economy was unlikely.
The benchmark Shanghai Composite Index tumbled 2.8 percent to close at 2,832.11 points, adding to a nearly 3 percent loss on Friday.
The People’s Daily cited an “authoritative person” as saying that although positive signs emerged in the first quarter, China’s growth is still dogged by downward risks including a sharp decline in private-sector investment, a real estate bubble and bad loans.
“China’s economic growth trend will be ‘L-shaped’ rather than ‘U-shaped,’ not to mention ‘V-shape,’” the source said, adding that the government should avoid investing excessively or expanding credit rapidly to boost growth.
Nomura Securities said in a note: “The report suggests to us that future policy easing may be more cautious and that the government may try to hasten the pace of reforms, thus reinforcing our view that the debt-fueled rebound in investment growth will be short-lived.”
Investor sentiment also took a hit from weak data released over the weekend that showed exports unexpectedly fell 1.8 percent year on year last month, reversing from a brief recovery in March, while imports shed 10.9 percent.
The market’s fall was also due to speculation that the securities regulator may tighten rules on reverse takeover by overseas-listed Chinese firms.
CRED Holding Co and Blackcow Food Co — potential shell companies seen as targets for backdoor listing — fell 8 percent and 7.4 percent.
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