Banks dragged China's stock markets lower on Wednesday amid concerns that regulators will continue to clamp down on debt risks, but strong gains in consumer staples left major indexes only slightly lower on the day. The blue-chip CSI300 was unchanged at 3,731.04 points while the Shanghai Composite Index dipped 0.2 percent to 3,275.57 points.
China CSI300 stock index futures for August were flat at 3,715, 16.04 points below the current value of the underlying index. The financials sub-index fell 1.1 percent, with mild consumer inflation data earlier in the day seen giving policymakers plenty of room to maintain controls imposed earlier this year as they seek to contain risks from a rapid build-up in debt.
While past efforts by Chinese authorities to curb riskier forms of financing and speculation have often faded over time, analysts believe the latest round of measures will have more staying power. Some outside economists have warned that China's debt load is at a level which has sparked crises in other economies.
"Today's inflation numbers were a bit better than expectations, and show that there is basically no inflation pressure. It's likely that the central bank will continue with monetary policy that's neither tight nor loose," said Zhang Gang, an analyst at China Central Securities.
China's state planner said the country will push on with achieving better results in getting its corporate sector to cut excessive borrowing, even though it has made initial progress in lowering debt levels. "The outlook for banks is not especially optimistic, and some aspects of future monetary policy remains uncertain," said Zhang. Ping An Bank Co fell 2.9 percent, and Industrial and Commercial Bank of China Ltd fell 2.3 percent.
In contrast, consumer staples remained strong, with the sub-index gaining 2.7 percent for the day. Dairy firm Inner Mongolia Yili Industrial Group Co jumped 7.2 percent. Shares of materials companies also bounced back after being hit by profit taking in the morning session.
Government efforts to reduce excess industrial capacity have pushed copper and aluminium prices to near five-year highs. Aluminum Corp of China rose 2.7 percent, while the overall materials sub-index gained 1.5 percent.