China stocks closed down on Friday after a central bank official cast doubts on the likelihood of further interest rate cuts and investors took profits following the previous day's bounce. Sheng Songcheng, director of the Survey and Statistics Department at the People's Bank of China, said tax cuts would be a more effective way of stimulating the economy than interest rate cuts, the National Business Daily reported on Friday.
Sheng added that China was caught in a "liquidity trap," meaning that driving rates down further would have little effect on real investment. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.8 percent, to 3,225.16, while the Shanghai Composite Index lost 0.9 percent, to 3,012.82 points.
For the week the CSI300 was down 1.6 percent and the Shanghai Composites was off 1.4 percent. Finance shares led indexes lower on the diminished prospects of more policy stimulus, with manufacturing shares also weighing heavily. Sheng is not the only one to have highlighted the growing divergence between credit growth and real growth in recent days. A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa. The northbound quota for the Hong Kong-Shanghai Stock Connect, currently set at 13 billion yuan, saw net inflows of 0.15 billion yuan.
Comments
Comments are closed.