China Stocks Pare Slide as State Funds Seen Buying Large Caps
(Bloomberg) -- China stocks pared a sharp drop as state-backed funds were seen buying large caps in the afternoon.
The SSE 50 Index of some of the country’s largest stocks fell 0.5 percent at the close, paring an earlier slide of 2.3 percent. Financial shares eked out gains. The Shanghai Composite Index fell 2.5 percent in the morning before paring the loss to 0.9 percent. Hong Kong’s equities market was closed for the holiday.
"The gains by big banks and insurers suggest state buying, and some funds may also be bottom-fishing stocks," said Dai Ming, a Shanghai-based fund manager with Hengsheng Asset Management Co.
Kang Chongli, a Beijing-based strategist with Lianxun Securities Co., said the 2,500 level "is both a policy and technical bottom" for the Shanghai Composite Index. The gauge ended the day at 2,504.82.
China’s "national team" of state-backed funds is frequently suspected of buying shares during turbulent times. Large caps like banks are among the most favored targets, and buying often comes in the afternoon so gains, or at least smaller losses, are locked in for the day. The funds were net buyers of bank stocks in the third quarter, UBS Securities Co. said in November.
China’s stock benchmark is down 24 percent this year, in line for the worst performance in a decade, as a trade dispute with the U.S. escalated.
Agricultural Bank of China Ltd. added 0.9 percent on Tuesday, erasing a drop of 0.6 percent. Bank of China Ltd. rose 0.6 percent, and Bank of Communications Co. rose 0.4 percent. China Southern Airlines Co. rose 1.9 percent as the best performer on the SSE 50 measure, erasing a slide of 1 percent in the morning.
A subgauge of energy stocks was the worst performer among the CSI 300 Index’s 10 industry groups, falling 2.1 percent as crude fell to the lowest level in a year and a half. China Petroleum & Chemical Corp. and PetroChina Co. lost at least 2 percent.
Other stories of note today:
- China Vows More Support for Private Sector Buffeted by Slowdown
- China Pledges to Treat State, Private and Foreign Firms Equally
- Citic Securities to Acquire Local Rival in Expansion Push
- PBOC Adviser Favors Cut in RRR Over Interest Rates: 21st Herald
- Analysts Expect China to Cut RRR 3 Times in 2019: Sec. Journal
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