China's stock markets fell on Thursday as fragile investor sentiment shattered earlier gains, and as trading volumes remained lighter than average ahead of a widely anticipated meeting between the US and Chinese presidents this weekend. At the close, the Shanghai Composite index was 1.4 percent lower at 2,567.44 points.
The blue-chip CSI300 index was down 1.3 percent, with its financial sector sub-index lower by 1.37 percent, the consumer staples sector down 0.36 percent, the real estate index down 2.47 percent and the healthcare sub-index down 0.55 percent. Trading was relatively light, with about 15.72 billion shares trading on the Shanghai exchange, roughly 87.6 percent of the market's 30-day moving average of 17.94 billion shares a day. The volume in the previous trading session was 14.60 billion.
The smaller Shenzhen index ended down 2.21 percent and the start-up board ChiNext Composite index was weaker by 2.115 percent. Analysts at China Fortune Securities said that a recent rebound did not mean that the market's correction has finished, highlighting the importance of a planned meeting this weekend between Chinese President Xi Jinping and US President Donald Trump in Argentina. Ongoing uncertainty in Sino-US trade relations will mean the market will be mainly led by changes in risk appetite in the near future, the analysts said. "Typically in markets led by risk appetite, good or bad information can easily spark severe volatility."
Investors are also awaiting new data that is expected to show that China's factories struggled to grow for a second straight month in November as cooling demand at home and the threat of higher US tariffs stifled new orders. Regional shares had earlier risen after US Federal Reserve Chair Jerome Powell said on Wednesday the central bank's policy rate is now "just below" estimates of a level that neither brakes nor boosts a healthy US economy - comments that many investors read as signalling the Fed's three-year tightening cycle is drawing to a close. But analysts at RBC Capital Markets said "markets are over interpreting Powell's reference to rates being 'just below the neutral range' and ... underprice the risk of policy normalisation next year." The largest percentage gainers in the main Shanghai Composite index were YanTai Yuancheng Gold Co Ltd, up 10.07 percent, followed by Suzhou Kelida Building & Decoration Co Ltd, gaining 10.05 percent and Shanghai Kindly Enterprise Development Group Co Ltd, up by 10.05 percent. The largest percentage losses in the Shanghai index were Shanghai Xinhua Media Co Ltd down 10.06 percent, followed by Tianfeng Securities Co Ltd losing 10 percent and Ginwa Enterprise Group Inc down by 9.51 percent. So far this year, the Shanghai stock index is down 22.4 percent, the CSI300 has fallen 22.2 percent, while China's H-share index listed in Hong Kong is down 9.7 percent. Shanghai stocks have declined 1.36 percent this month.
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