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China stocks fall to 9-month low amid weaker-than-expected policies
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People walk at the main shopping area in Shanghai, China, on March 14, 2023. (Reuters/Aly Song)
C
hina stocks fell to around nine-month lows on Monday as investors were disappointed by milder-than-expected measures by authorities to boost confidence in the economy, with sluggish recovery and property woes keeping sentiment fragile.
China's blue-chip CSI 300 Index was down 1.4 percent at the close, while the Shanghai Composite Index lost 1.2 percent.
Hong Kong's Hang Seng Index fell 1.8 percent, and the Hang Seng China Enterprises Index declined 1.9 percent.
Both the CSI and Hang Seng benchmarks dropped to their lowest levels since late November 2022, erasing all gains accumulated after China's reopening from COVID curbs.
China cut its one-year benchmark lending rate on Monday, but surprised markets by keeping the five-year rate unchanged, falling short of market expectations of cuts to both rates.
On Friday, China's securities regulator unveiled a package of measures aimed at reviving a sinking stock market, including cutting trading costs, supporting share buybacks and encouraging long-term investment.
"The government's policy support has arguably been less than what was indicated earlier in the year," said UBS economists led by Tao Wang.
UBS downgraded China's GDP growth forecast to 4.8 percent for 2023 from 5.2 percent earlier.
Most sectors fell in mainland markets, with shares of property developers, tourism-related firms, new energy and securities brokers down between 2 percent and 3.5 percent each to lead the decline.
Foreign investors sold Chinese shares via the Stock Connect for the eleventh session in a row, selling a net 6.4 billion yuan ($875.2 million) on Monday.
In Hong Kong, tech giants and property developers both lost roughly 2 percent.
Goldman Sachs expects Chinese stocks will settle in a lower trading range than previously expected, until more forceful policy responses are made available to backstop the contagion risk from the ailing housing market.
The bank's analysts cut the full-year earnings per share growth estimate for MSCI China to 11 percent from 14 percent.
