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China stocks fall sharply, set to snap winning streak
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Cars travel past a display showing Shanghai and Shenzhen stock indexes near the Shanghai Tower and other skyscrapers at the Lujiazui financial district in Shanghai, China, on Feb. 5, 2024. (Reuters/Xihao Jiang)
M
ainland China stocks plunged on Wednesday and were poised to snap a 10-day winning streak after officials failed to inspire confidence in stimulus plans intended to revive the economy.
Wednesday's moves were a reversal from those seen the day before, after mainland Chinese stocks returned from a week-long holiday with a bang while those in Hong Kong stuttered.
As of 0239 GMT, the benchmark Shanghai Composite index fell 5.3 percent while the blue-chip CSI300 Index dropped 5.8 percent.
The A-share market comprised of stocks listed in Shanghai, Shenzhen and Beijing had a roller-coaster ride a day earlier after returning from a week-long holiday break, with turnover hitting a record 3.485 trillion yuan (US$493.17 billion) on Tuesday.
Hong Kong's Hang Seng index is one of the best-performing major global markets this year, having seen its steepest rally in a generation over recent weeks. It was down 1.9 percent after starting the day higher.
"The market is widely anticipating a fiscal stimulus announcement sometime this month, something like 2-3 trillion yuan is the range being talked about," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
"The positive sentiment on China assets lately is premised on expectation of a major fiscal stimulus package, so that sentiment will turn quickly if we don't get some package at least matching the range above."
Tourism shares were among the top losers on Wednesday, as data showed that spending during the Golden Week holidays was yet to recover to pre-COVID levels. An index tracking the performance of the sector lost 7.8 percent.
Separately, property shares were another big draggers on the market. The CSI 300 Real Estate index plunged 9.7 percent.
"To be sure, the impact of support measures will take time to unveil," Samuel Tse, economist at DBS, said in a note.
"A sustained property and consumption recovery, especially in tier 2-3 cities, requires further stimulus and a lasting positive wealth effect from the equity market."
In overseas markets, Singapore-traded FTSE China A50 futures fell about 1.5 percent.
