China stocks reverse hefty losses

China stocks reversed losses and rose for a sixth straight session on Tuesday, as a sharp course-change for start-up board ChiNext and a late rally in banking stocks pulled main indexes out of negative territory in the last few minutes of trading. Both the blue-chip CSI300 index and the Shanghai Composite Index erased early losses of more than 2 percent, and ended the day up 0.1 percent, at 3,107.67 points and 2,901.39 points, respectively.
The ChiNext witnessed wild swings, slumping over 4 percent during the morning session but ended the day up 2.2 percent. The Shanghai Composite gained nearly 8 percent during the five-day winning streak, but with the gauge approaching the ceiling of the Bollinger band - a widely watched indicator of resistance - some investors started to unwind their positions.
"Don't forget the backdrop of the rebound is a bear market, so after solid gains, it's natural for investors to take profit," said Zhang Xiaochun, strategist at Guolian Securities. In mid-morning, China issued data showing February trade performance was much worse than economists expected, with exports tumbling the most in over six years, but that did not pull down Chinese market indexes.
Concerns over rapid yuan depreciation and China's capital outflows subsided after data released late on Monday showed the country's foreign exchange reserves fell $28.57 billion in February, less than expected and easing from January's slump. Zhang added that news flows from the Chinese parliament meeting signals little chance of massive stimulus, and with a tentative property market recovery and gold diverting liquidity from the stock market, "the rally is hardly sustainable".
A Shenzhen-listed gold exchange-traded fund run by E Fund Management Co had doubled in size over the past two weeks, underscoring strong Chinese interest in perceived safe haven assets despite the equity rebound. The banking and property sector dropped about 2 percent, amid signs that Beijing is increasingly concerned about rapid home price gains in several major cities recently. People's Bank of China Vice Governor Chen Yulu said China's central bank will strengthen its supervision of real estate financing to promote healthy development of the property market.