China Stocks Set for Worst Week This Year as State Cools Gains

(Bloomberg) -- The hottest part of China’s stock market is cooling down as investors switch out of large cap shares into smaller companies.

The CSI 300 Index of some of China’s biggest companies has fallen 2.3 percent this week, poised for its biggest loss this year. The gauge had been the best place for a Chinese investor to put money in this year until the government signaled its concern about the pace of gains in high-flying shares like Kweichow Moutai Co. Taking the hint, money has flowed into beaten down small caps -- with the ChiNext gauge rallying 1.3 percent in the five-day period.

To contact the reporter on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net.

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net, Will Davies

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