China stocks closed up on Thursday as rises in auto stocks and industrials offset declines in financials resulting from news of a pending crackdown on stock investments by China's massive wealth management industry. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.1 percent, to 3,221.14, while the Shanghai Composite Index gained 0.1 pct to 2,994.32 points.
China is considering restricting investments by small banks in the rapidly growing $3.5 trillion wealth management product (WMP) industry, draft rules seen by Reuters showed, as concerns grow that they are taking increasing risks. The curbs could include capping their investment in the stock market. That made for a rough trading day on Wednesday, with benchmarks dropping over 3 percent in mid afternoon before recovering slightly.
"The move is expected to slow cash inflows into the stock market, although details of how the curbs will be implemented are still void," said Zhang Qi, senior analyst at Haitong Securities in Shanghai. "Faced with the uncertainty, share prices may have the potential to fall further in near term, but the room should be limited as the funds to be restricted are also seen limited." China CSI300 stock index futures for August rose 0.8 percent, to 3,183.6, some 21 points below the current value of the underlying index and suggesting investors see further losses.
The Shanghai financial index fell 1.2 percent, with top lender Industrial and Commercial bank of China dropping 0.5 percent. Top insurer China Life Insurance slumped 1.7 percent. China insurance industry profits fell 54.05 percent in the first half of the year to 105.6 billion yuan ($15.85 billion), even as premiums and assets surged, the insurance regulator said on Thursday.
Auto shares, on the other hand, rose after positive earnings from Changan Auto's joint venture with Ford. 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 0.09 billion yuan. Total volume of A shares traded in Shanghai was 11.10 billion shares, while Shenzhen volume was 12.94 billion shares. Total trading volume of companies included in the HSI index was 0.8 billion shares.