Chinese stocks edged lower on Thursday as expectations of policy support failed to offset persisting worries over economic growth. The Shanghai Composite index ended nearly flat at 2,464.36, while the blue-chip CSI300 index fell 0.2 percent.
The People's Bank of China said on Wednesday evening it had relaxed its conditions on targeted reserve requirement cuts to benefit more small firms. The move came after China reported its first factory activity contraction in over two years in December. But "that policy alone is not enough to give the market an obvious boost," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu. Cao noted that the market will react more positively to further details on tax cuts, which will come at some point this year, China's leaders said last month. "Some in the market have said that there might be as much as 5 trillion yuan of tax cuts over the next five years," he said.
Most of CSI300's sub-indexes were down. The IT sector lost 1.3 percent, telecom shares slid 2.8 percent, while consumer staples dropped 1.8 percent and healthcare shed 2.8 percent. Financials bucked the trend and climbed 1.1 percent.
The smaller Shenzhen index was down 0.8 percent and the start-up board ChiNext Composite index fell 1.2 percent. Apple Inc made a rare cut to its quarterly sales forecast on Wednesday, and, for the first time since the iPhone was launched in 2007, issued a warning on its revenue guidance ahead of releasing quarterly results. Shares of Apple suppliers across the Mainland China, Hong Kong and Taiwan markets came under pressure.
Although "there is some impact in Apple concept stocks, most people care more about macro data," said Zhang Gang, a Shanghai-based analyst at Central Securities.
While most sectors eased, securities companies, which typically rise when share prices are expected to jump, rose 2.2 percent. This could foreshadow a rebound in A-shares in the coming months. "If the market warms up this year, these brokerages will benefit first," Zhang added. Jim McCafferty, head of equity research, Asia ex-Japan at Nomura, also noted that this year may be less gloomy than the last. "The Chinese market, having delivered a dismal 2018, is one of the least expensive markets globally," he said. But pressure remains on Chinese stocks in the near term, as listed companies, which were hit by the double whammy of Sino-US trade war and softer economic growth at home, begin to report their 2018 earnings, Cao noted.
The largest percentage losers in the Shanghai index were Tonghua Dongbao Pharmaceutical Co Ltd, Shanghai U9 Game Co Ltd and Kangmei Pharmaceutical Co Ltd, all down 10 percent.
The largest percentage gainers in the main Shanghai Composite index were Pengqi Technology Development Co Ltd and Guodian Nanjing Automation Co Ltd, both up 10.1 percent, Qingdao Huijintong Power Eouipment Co Ltd, up 10 percent.
About 12.4 billion shares traded on the Shanghai exchange, roughly 90.5 percent of the market's 30-day moving average of 13.75 billion shares. The volume traded was 10.99 billion as of the last full trading day.
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