Trader of Chinese stocks has loosing steam over hopes of market rebound as stimulus packages fall short of expectation while the economy faced with fresh wave of COVID-19 infections.
President Xi Jinping’s speech at the opening ceremony of the Boao Forum for Asia on Thursday also failed to enthuse equity traders, with the CSI 300 Index down 1.43%, heading for a fifth day of losses.
With Wednesday’s policy decision to keep lending rates uncharged came at a surprise to investors. Lockdowns in major cities along with rising interest rates in the U.S. posing capital outflow risks also slumped sentiment.
Chinese high-yield dollar bonds were unchanged to down 1 cent on the dollar Thursday morning, according to credit traders. The onshore yuan weakened for a third day against the dollar to trade at its lowest level since October.
“Matters have taken a turn for the worse with the latest round of the Covid-19 resurgence that has led to lockdowns of key economic hubs,” BofA Securities Inc. strategists led by Ritesh Samadhiya wrote in a note this week.
“A significant ramp up in policy easing is paramount in attaining the ‘about 5.5%’ growth target.”
Foreign investors are pulling out money from mainland shares as lockdown intensifies underscoring growth risks along with the yuan’s weakness against the dollar fell to multi-month lows. Foreigners offloaded 45 billion yuan ($7 billion) of shares onshore through the stock connect in March, the most in two years. Net outflows amounted to 6 billion yuan so far this month through Wednesday, according to data compiled by Bloomberg.
Meanwhile, daily turnover on Shanghai and Shenzhen exchanges dropped below 800 billion yuan earlier this week, the lowest level since May last year.
