July 31, 2019 / 4:41 AM / 19 days ago

China stocks fall on Trump's trade warning; real estate drags

* SSEC -0.5%, CSI300 -0.7%; HSI -1.1%, at 7-week low

* Trump warns Beijing against holding deal until 2020

* China says it won’t use property to stimulate economy

HONG KONG, July 31 (Reuters) - China stock market dropped on Wednesday after a warning from U.S. President Donald Trump to China as bilateral trade talks were underway, while Beijing’s less accommodative tone on the property market dented sentiment, sending real estate shares down.

** At the midday break, the Shanghai Composite index was down 0.5% at 2,936.58 points. The blue-chip CSI300 index slipped 0.7%. ** CSI300’s financial sector sub-index was lower by 1.1%, the consumer staples sector fell 0.9% and the healthcare sub-index was down 0.7%. ** Chinese H-shares listed in Hong Kong dropped 1.2%, while the Hang Seng Index was down 1.1% at 27,833.04, its lowest level since June 11. ** The smaller Shenzhen index was down 0.5%. The start-up board ChiNext Composite index was also weaker by 0.5%. ** Trump on Tuesday warned China against waiting out his first term to finalize any trade deal, saying if he wins re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China. ** The remarks came as top U.S. and Chinese trade officials met in Shanghai on Wednesday for talks in a bid to end a year-long trade war. ** Shares in Chinese developers slid over 3% after a top decision-making body of the ruling Communist Party said on Tuesday that China will not use the property market as a form of short-term stimulus. ** These comments imply that the Chinese leadership “hopes to stimulate economic growth through consumption, stimulus real estate and investment is not a policy option at the moment,” analysts at Chuancai Securities wrote in a note on Wednesday. ** Policymakers also stressed they will step up efforts to boost demand and support the economy, and will “continue to implement the policy of tax and fee cuts.” ** China’s factory activity shrank for a third straight month in July, an official survey showed on Wednesday. The gauge stood at 49.7, a touch higher than in June, but fell short of the 50-point mark separates expansion from contraction. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.5%, while Japan’s Nikkei index slipped 0.6%. ** The largest percentage losses in the Shanghai index were Shanghai Shibei Hi-Tech Co Ltd, down 8.9%, followed by Shanghai Shibei Hi-Tech Co Ltd, losing 8.8% and Hangzhou Cable Co Ltd, down by 7.8%. ** In Hong Kong, the top gainer on the Hang Seng was New World Development Co Ltd, up 0.4%, while the biggest loser was Shenzhou International Group Holdings Ltd, which was down 4.1%. ** As of midday, China’s A-shares were trading at a premium of 30.33% over the Hong Kong-listed H-shares. ** The Shanghai stock index is above its 50-day moving average and above its 200-day moving average.

Reporting by Noah Sin, Editing by Sherry Jacob-Phillips

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