Wednesday, February 21

China stocks slip on unchanged benchmark rates, higher COVID-19 cases


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SHANGHAI — China stocks slipped on Monday, dragged by higher COVID-19 cases and an unchanged benchmark interest rate by its central bank even as the government last week pledged to support the domestic economy and financial markets.

The CSI300 index fell 0.1% to 4,260.30 at the end of the morning session, while the Shanghai Composite Index was unchanged at 3,251.58 points.

The Hang Seng index dropped 0.1%, to 21,394.27. The Hong Kong China Enterprises Index lost 0.4% to 7,338.36.

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** Despite the central bank’s decision, investors widely expect policymakers to resume monetary easing soon to revive an economy hit by resurgence in COVID-19 infections, weaker credit growth and a faltering property sector amid increasing global risks from the Ukraine conflict.

** China’s sound economic fundamentals, pro-growth policies, and continuous moves to open up markets will make yuan assets more attractive to foreign investors, the official Securities Times said in a commentary on Monday.

** “Many global investors’ faith in long-term investment in China is shaking,” said Dan Wang, Chief Economist at Hang Seng Bank China. “The government has to revive their confidence, including the wrap-up of platform economy’s regulation, an easing monetary policy and an effective method to combat the resurgent COVID-19 outbreaks.”

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** The CSI 300 Real Estate Index and the Hang Seng Mainland Properties Index went down more than 2% each.

** Tourism stocks and transport firms lost 1.4% and 2.1% respectively. Mainland China reported 2,027 confirmed coronavirus cases for March 20, the country’s national health authority said on Monday, compared with 1,737 a day earlier.

** Tech giants listed in Hong Kong ended flat at the midday break, after having a roller coaster ride last week, with Meituan down 4.2% while Alibaba Group gaining 2.4%.

** “The pressure on the onshore market cannot be easily dissipated by one meeting or a phone call,” said Hao Hong, Head of Research at BOCOM International in a note. “We continue to believe a second low is likely, if history is a guide.”

(Reporting by Shanghai Newsroom; editing by Uttaresh.V)

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