China stocks see-saw near 2-year lows as Shanghai extends lockdown
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SHANGHAI — China stocks see-sawed near two-year lows on Friday and the yuan extended losses as strict COVID-19 lockdowns paralyzed economic activity in many big cities, even as authorities vowed to provide more help to smaller firms hardest hit by the pandemic.
Shanghai authorities doubled down on their offensive against the virus, launching a new round of city-wide testing and warning residents their three-week lockdown would only be lifted in batches once transmission is stamped out.
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The CSI300 index edged up 0.1% to 4,000.79 points by the end of the morning session, after slumping 1.1% earlier, while the Shanghai Composite Index slid 0.1% to 3,077.80, both not far from lows plumbed in March.
China’s two benchmark indexes have erased almost all gains made in the wake of Vice Premier Liu He’s pledge on March 16 to support the economy and financial markets on March 16.
They are also set to log the biggest weekly drop since late January, shedding more than 4% each.
In Hong Kong, the benchmark Hang Seng fell 0.6%, putting it on track for a weekly 4.4% loss, while the Hong Kong China Enterprises Index slipped 0.4%.
“China’s financial market is not immune to the external shocks and the domestic COVID-19 situation is also putting more downward pressure on growth,” People’s Bank of China (PBOC) Governor Yi Gang said in a video speech to the annual Boao Forum for Asia.
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China will continue to support the economy, and monetary policy will focus on supporting small firms and sectors hit by COVID outbreaks, Yi added.
“Negative factors weighing on China stocks haven’t been fully eliminated, leading the main indexes to touch lows for the second time,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, while adding that some funds had entered the market as the Shanghai Composite Index nears the key 3,000-point level.
China’s top securities regulator said on Thursday that the economy remained healthy despite numerous challenges, asking institutional investors to invest more in equities to help limit short-term market fluctuations while contributing to economic restructuring.
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On the same day, the government launched its first private pension scheme that will potentially channel more long-term money into the stock market.
In China, real estate developers surged 2.8%, and banks added 1.8%, while shares in semiconductors and tourism were down 2.7% and 1.7%, respectively.
Tech giants listed in Hong Kong dropped 0.9%.
The U.S. Securities Exchange Commission on Thursday added 17 firms, including Chinese names Li Auto, Ke Holdings and Zhihu Inc , to the latest batch of stocks potentially facing delisting from the United States.
China’s securities watchdog is holding regular talks with U.S. regulators over audit cooperation and expects a deal soon, the vice chairman of the securities regulator said on Thursday.
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“There is no incremental information from the moves by U.S. regulators, which are normal procedures following domestic laws and the Holding Foreign Companies Accountable Act (HFCAA),” said Bruce Pang, head of research and macro strategy at China Renaissance Securities (HK).
Pang added the uncertainties are now left to the U.S. side, “considering the mid-term elections and geopolitical tensions, uncertainties remained high in the future.”
Li Auto dropped roughly 3% in Hong Kong, while Zhihu slumps more than 20% in its Hong Kong debut.
China’s yuan extended losses against dollar and looked set for its worst week in more than 2-1/2 years.
The sizable losses prompted some investors to wonder if the authorities were encouraging a weaker currency to counter the sharp economic slowdown. (Reporting by Jason Xue and Andrew Galbraith; Editing by Himani Sarkar and Ki Coghill)