* HSI -2.7 pct, H-shares -3.7 pct, CSI300 -3.5 pct
* China indexes break below chart support in rising volumes
* Beijing unlikely to waver from policy positions: official
* Merchants Bank set for worst A-share daily loss since Nov
By Clement Tan
HONG KONG, June 13 China shares tumbled to
six-month lows on Thursday, weighing on Hong Kong stocks, rocked
by soft economic data and a sell-off in global markets triggered
by worries central banks will taper stimulus.
Official Chinese media reported on Thursday that Beijing was
likely to maintain its policy position despite lackluster
growth, hitting the market across various sectors from banks to
technology, standout outperformers this year.
By midday, the CSI300 of the leading Shanghai and
Shenzhen A-share listings was down 3.5 percent, while the
Shanghai Composite Index slid 3.1 percent. Both were
languishing at their respective lowest levels since December.
Losses on Thursday led both onshore Chinese benchmarks to
break through chart support at previous 2013 lows in April and
May, suggesting more losses may be imminent in the short term.
China markets reopened on Thursday after the three-day Dragon
Boat Festival holiday.
The Hang Seng Index was down 2.7 percent at 20,782.2
points, its lowest since September. The China Enterprises Index
of the top Chinese listings skidded 3.7 percent, set for
an eleventh-straight daily loss.
Hong Kong markets were also shut on Wednesday for the Dragon
Boat Festival. Over the week, global investors had readjusted
their positions in anticipation of a tapering of U.S. monetary
Losses in Hong Kong on Thursday came as turnover spiked, but
midday volumes in Shanghai were well off highs despite improving
from last week's anemic levels.
The Chinese central bank injected funds after money rates
jumped last week amid tight money conditions, leading mainland
stock markets to their first weekly loss in six.
"It's not looking too good in the Chinese stock markets, but
the volumes look a bit weak, suggesting this is not quite a
panic-induced sell-off," said Zhang Qi, a Shanghai-based analyst
with Haitong Securities.
"There are several negative triggers on the day, including
weak economic data, reports that the A-share IPO approvals could
resume as soon as July and of course, the money market
situation," Zhang added.
China had published draft rules late last Friday to improve
the transparency and pricing of initial public offerings in
domestic stock markets, a move that could signal a resumption in
new listing approvals after a seven-month hiatus.
Shenzhen shares of China Vanke, the mainland's
largest property developer by sales, are set for their worst day
in three months after sliding 3.8 percent. The Economic
Information Daily reported on Thursday that home sales in major
Chinese cities unexpectedly declined during the three-day
Prada dived 6.8 percent to a one-month low in Hong
Kong after the Italian luxury brand posted pedestrian quarterly
earnings that saw growth in its smaller brands lag the
performance of its eponymous fashion label.
DATA SINKS CHINA BANKS
Chinese banks were hit by data that showed weaker new loans
were extended in May than expected. Mid-sized bank China
Merchants Bank dived 4.4 percent in
Shanghai, headed for its worst daily loss since November 2008.
Its Hong Kong listing shed a more modest 2.4 percent.
M2 money supply rose 15.8 percent in May from a year
earlier, slightly below a median forecast of 15.9 percent, while
total social financing, a broad measure of cash in the economy,
was 1.19 trillion yuan versus 1.75 trillion yuan in April.
China's National Audit Office, responsible for overseeing
state finances, warned of rising local government debt. In a
report on Monday, total debt at 36 local governments had risen
13 percent to stand at 3.85 trillion yuan ($627.70 billion) at
the end of 2012 from two years before.
On the year, the Hang Seng Index is now down more than 8
percent, while the China Enterprises Index has tumbled 16
percent. The CSI300 has shed a more modest 5 percent,
and the Shanghai Composite Index is down almost 6 percent.
MSCI index managers said on Wednesday that shares listed in
onshore China markets could rise to 30 percent on MSCI emerging
equity indexes, double current levels, a move that could attract
more institutional interest, further supporting the A-share