Chinese blue-chip shares ended lower on Wednesday amid investor concerns over a slowing economy and Beijing's trade dispute with Washington while foreign investors sold shares, but bargain hunting lifted insurance firms and the benchmark Shanghai index. The blue-chip CSI300 index ended down 0.23%, with its financial sector sub-index closing flat, the real estate index down 1.55%, while the healthcare sub-index closed 0.89% weaker.
However, the Shanghai Composite index rebounded from earlier losses to end 0.16% firmer at 2,914.70. Net sales by foreign investors of A-shares through the Stock Connect linking Hong Kong and the mainland topped 3 billion yuan ($433.95 million). Foreign investors made net purchases on Monday after an eight-session selling streak.
A sub-index tracking banking shares lost 0.85% on the day amid ongoing uncertainty over the impact of a regulatory takeover of Baoshang Bank, a troubled regional lender. Chinese money rates rose following the takeover, but have since retreated. China's central bank made its largest daily net cash injection into the banking system in more than four months on Wednesday.
Underscoring the risk to market expectations of implicit guarantees, sources told Reuters that haircuts of as much as 30% are possible in the repayment of Baoshang's larger debts.
However, shares of China's major insurance firms jumped as investors hunted for bargains in a sector whose valuations, analysts say, are attractively low. People's Insurance Group of China (PICC) surged 8.85% and China Life Insurance Co Ltd added 4.82%. Shares of China's rare earth-related firms also climbed after reports that Beijing is mulling restricting exports to the United States. JL MAG Rare-Earth Co Ltd, which was visited by Chinese President Xi Jinping last week, rose by the daily 10% limit to a record high.
Major Chinese newspapers warned the United States on Wednesday that China is ready to use rare earths to strike back in their bitter trade war, with the ruling Communist Party's People's Daily newspaper saying in an extremely strongly worded commentary, "don't say we didn't warn you".
The smaller Shenzhen index ended unchanged for the day and the start-up board ChiNext Composite index was weaker by 0.483%. The largest percentage gainers in the main Shanghai Composite index were Danhua Chemical Technology Co Ltd, up 10.11%, followed by Nanjing Tanker Corp, gaining 10.1% and First Tractor Co Ltd, up by 10.08%.
The largest percentage losses in the Shanghai index were HNA Infrastructure Investment Group Co Ltd down 7.38%, followed by Qingdao Topscomm Communication Inc losing 6.27% and Aurora Optoelectronics Co Ltd down by 5.23%. So far this year, the Shanghai stock index is up 16.9% and the CSI300 climbed 21.7%, while China's H-share index listed in Hong Kong is up 2.8%. Shanghai stocks dropped 5.32% so far this month.
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