October 25, 2018 / 5:03 AM / 9 months ago

China govt support fails to bolster shares amid global rout, HK falls

* SSEC -1.4 pct, CSI300 -1.3 pct, HSI -1.8 pct

* Chipmakers slump in step with falls in U.S. peers

* Government support efforts fail to rally sentiment

SHANGHAI, Oct 25 (Reuters) - China’s stock market fell on Thursday amid a global sell-off, as fresh market-support measures by the government failed to soothe investor worries about high leverage and the Sino-U.S. trade war.

By the midday break, China’s blue-chip CSI300 index was 1.34 percent lower at 3,145.52 points while the Shanghai Composite Index was down 1.4 percent at 2,566.21 points. Both indexes had ended slightly higher the previous session.

The smaller Shenzhen index was down 1.99 percent and the start-up board ChiNext Composite index was weaker by 2.55 percent.

“While Chinese stocks are burdened by the U.S. market, losses are relatively small. Chinese investors continue to have a thread of hope,” Liu Min, an analyst at FXTM China, said in a note, noting a daily stream of policy announcements aimed at supporting markets.

But analysts at Huatai Securities forecast continuing weakness.

“Share prices are already at relatively low levels, but by no means does this mean that risk assets represented by stocks are going to turn higher,” they said in a morning note. “We advise standing fast and waiting for policy signals.”

Hong Kong’s benchmark Hang Seng index was down 1.8 percent at 24,794.60 points. The Hang Seng has lost 10.8 percent so far this month, putting it on track for a record-matching sixth consecutive monthly fall.

The index has only posted six straight monthly losses once in its history, in 1982.

The Hang Seng’s China Enterprises Index was 1.71 percent lower at 10,051.40 points, and Cathay Pacific Airways Ltd touched a nine-year low following news of a passenger data leak.

Chipmakers were hit particularly hard following losses of their U.S. peers on Wednesday. A sub-index of the CSI tracking IT firms fell 3.24 percent after the Philadephia SE Semiconductor Index fell 6.6 percent following mixed results and disappointing forecasts.

In Hong Kong, the Hang Seng index tracking the IT sector was down 3 percent.

The CSI300 consumer sub-index was 3.07 percent lower, health care firms lost 2.58 percent and financial firms were 0.06 percent lower.

Across the region, Asian shares plunged as hundreds of billions of dollars haemorrhaged from global markets after a rout in tech stocks inflicted the largest daily decline on Wall Street since 2011, wiping out all its gains for the year.

A further slide in China stocks could worsen liquidity pressures in a market already strangled by about $620 billion worth of shares pledged for loans.

Investors largely ignored news overnight that government-backed Shenzhen Investment Holding would issue 1 billion yuan ($144 million) of bonds, raising money to support struggling listed firms.

On Thursday morning, China’s banking and insurance regulator published a notice allowing insurance asset management firms to launch dedicated products that provide liquidity support to listed firms in a bid to reduce risks related to pledged shares.

Elsewhere, China’s yuan was slightly weaker on a stronger U.S. dollar. The yuan was quoted at 6.9432 per dollar at 0410 GMT, 0.01 percent weaker than Wednesday’s close of 6.9422.

Chinese government bond futures rose slightly as equity markets fell. Chinese 10-year Treasury futures for December delivery, the most traded contract, gained 0.12 percent to 95.565.

$1 = 6.9426 Chinese yuan Reporting by Samuel Shen and Andrew Galbraith; Editing by Jacqueline Wong

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