China Stocks Pare Best Weekly Gain in a Month as Financials Slip

China’s stocks retreated, paring a weekly advance, as financial companies declined before the resumption of initial public offerings after a five-month freeze.

Gemdale Corp. and Bank of China Ltd. declined more than 2 percent as a gauge of financial stocks fell for the first time in five days. Hebei Iron & Steel Co. led commodity companies lower, while China Railway Group Ltd. climbed 1.6 percent after the company announced a 11.55 billion yuan ($ 1.8 billion) asset swap with China Railway Erju Co.

The Shanghai Composite Index lost 0.9 percent to 3,551.30 at 9:57 a.m. local time. The gauge advanced 4.3 percent this week through Thursday on speculation the People’s Bank of China will extend monetary easing as the government tackles the sharpest economic slowdown in a quarter of a century. Ten Chinese companies began subscriptions for IPOs this week, the first of 28 offerings this month that could tie up 3.4 trillion yuan, according to estimates compiled by Bloomberg. China Securities Regulatory Commission has approved a second batch of 10 IPOs, according to a statement on its official microblog.

The CSI 300 Index dropped 1 percent. The Hang Seng China Enterprises Index of mainland-listed companies declined 1.4 percent, while the Hang Seng Index lost 1.1 percent.

The premium of Shanghai over Hong Kong dual-listed stocks grew to 42 percent on Thursday, the widest in three months.

Margin traders reduced holdings of shares purchased with borrowed money for a third day on Thursday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling to 701.2 billion yuan.

Source: Bloomberg

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Chinese Stocks Rise Most in Month as Large-Cap Financials Surge

China’s stocks rose the most in a month as financial companies rallied on prospects for monetary stimulus. Small-cap technology shares tumbled before the first initial public offerings in five months.

The Shanghai Composite Index climbed 2.3 percent to 3,536.91 at the close, while the CSI 300 Index advanced 3.6 percent. China Life Insurance Co., China Vanke Co. and China Citic Bank Corp. all surged by the 10 percent daily limit. The ChiNext index of technology shares lost 1.6 percent. The central bank stepped up cash injections via open-market operations on Tuesday as the restart of new share sales drove demand for funds.

Speculation has intensified the central bank will add to the six interest-rate cuts since November last year amid a recent raft of indicators signaling a deepening economic slowdown, including falling exports, declining producer prices and slowing industrial output. Manufacturing conditions are at the weakest level in more than three years, official data showed on Tuesday.

The Shanghai index changed direction at least seven times in the morning before rallying in the last hour of trading. The gauge’s 10-day volatility hovered near three-month highs as trading volumes slid 8.8 percent below the 30-day average. The Hang Seng China Enterprises Index increased 1.3 percent at 3:12 p.m. in Hong Kong, while the Hang Seng Index added 0.7 percent.

Source: Bloomberg

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