China stocks slide as policy pledges fail to impress investors

Reuters12-13
China stocks slide as policy pledges fail to impress investors

SINGAPORE, Dec 13 (Reuters) - Chinese stocks skidded toward their heaviest losses in three weeks on Friday, after a readout from a major economic policy meeting repeated pledges to issue debt, lower interest rates and support growth but offered nothing new to excite investors.

** At the midday break, the Shanghai Composite index .SSEC was down 1.49% at 3,409.87 points. The blue-chip CSI300 index .CSI300 slipped 1.82%, while the Hang Seng Index .HSI in Hong Kong dropped 1.66% to 20,057.69.

** If sustained, the drops would be the biggest since late-November. All three indexes remain on track to notch a weekly gain, since the outlook for policy support remains promising.

** A state media readout of the annual agenda-setting Central Economic Work Conference renewed promises to increase the budget deficit and maintain economic growth. Earlier in the week, the Politburo said it would switch to an "appropriately loose" monetary policy stance.

** "Both the Politburo and CEWC look more like a policy recap of the stimulus measures in the past months rather than a new supporting deal to the economy," ANZ analysts said.

** Financials .CSI300FS were down nearly 2%, consumer staples .CSI000912 dropped 2.2%, real estate .CSI000952 down 2.8% and healthcare .CSI300HC lost 1.9% and all suffered selling in Shanghai.

** Developer Longfor 0960.HK was the top loser in Hong Kong, falling 6.3%. Other property shares fell along with consumer-sensitive stocks such as Budweiser Brewing APAC 1876.HK.

** "Investors took profit as the anticipated meeting ended, so the correction is natural," said Huang Yan, fund manager at Sanghai QiuYang Capital Co. He expects the Shanghai benchmark to get support around 3,400 points as the market awaits a likely U.S. rate cut next week.

** Thirty-year Chinese government bond yields CN30YT=RR fell below 2% for the first time in morning trade - a negative signal for long-term growth expectations - and the yuan CNY=CFXS dipped to 7.2762 per dollar.

(Reporting by Tom Westbrook in Singapore, Additional reporting by Reuters' Shanghai Newsroom; Editing by Sherry Jacob-Phillips)

((tom.westbrook@tr.com; +65 6973 8284;))

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