China stocks were little changed on Thursday, and trading volume shrank to near 3-1/2-month lows as many investors sat on their hands amid economic worries and revived concerns US interest rates will go up soon. The bluechip CSI300 index fell 0.2 percent, to 3,062.50, while the Shanghai Composite Index was virtually unchanged, at 2,806.91 points.
Investors were cautious due the growing possibility of a US hike in June, after minutes from the last Federal Reserve meeting showed central bank officials felt the US economy could be ready for such a move. The China market has already been sluggish recently on fears that Beijing is shifting policy away from rapid credit expansion to stimulate growth.
In further evidence there may be such a shift, the State Council, or China's cabinet, at a meeting on Wednesday, urged state-owned companies to step up efforts in restructuring and cutting excessive capacity. Most sectors fell on Thursday, but resource shares rose, after state-owned steel and coal companies were instructed to cut production capacity by 10 percent over 2016 and 2017, and to accelerate mergers while cutting losses.
The prospects of further US monetary tightening "would certainly exert pressure on the stock market," said Alex Fan, strategist at GF Holdings (Hong Kong) Corp. Other uncertainties hurting China and Hong Kong markets include Britain's "Brexit" campaign to leave the EU, and the progress of China's economic restructuring, he added. Such uncertainty is putting many investors on the sidelines, with trading volume light in both markets.