Chinese stocks clawed back losses on Tuesday to close flat, recovering from concerns that upcoming initial public offerings will drain money from existing shares.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended flat at 3,641.06, while the Shanghai Composite Index finished at 3,351.45 points.
China's mkt regulator approved IPOs of 20 firms to increase supply as their mkt rallies. Why is our IPO market still in a somnolent state?
— lokeshwarri sk (@lokeshwarri)
January 6, 2015The securities regulator had approved 20 IPOs late on Monday , which has led some investors to worry new issues will draw money away from existing shares, said Cao Xuefeng, head of research at Huaxi Securities.
Those fears had contributed to the declines in the morning, when both indexes were down around 1 per cent.
Financial shares were the largest drag on the market, with the CSI300 financial sub-index declining 1.83 per cent at the close.
Financials have led the recent stock rally as hopes remain high for further monetary easing, and the sub-index is up more than 65 per cent since the rally began in late November.
Both the CSI300 and Shanghai Composite had hit more than five-year highs on Monday.
Among the most active stocks in Shanghai were Bank of China, up 3.4 per cent at 4.57 yuan; Agricultural Bank of China, up 1.8 per cent at 3.96 yuan; and Industrial and Commercial Bank of China, up 0.8 per cent at 5.10 yuan.
In Shenzhen, TCL Corp, up 3.0 per cent at 4.15 yuan; BOE Technology Group, up 0.9 per cent at 3.49 yuan; and China Vanke, down 3.7 per cent at 14.36 yuan, were among the most actively traded.
Foreign investment flowing into Shanghai from Hong Kong through the mutual market access pilot programme took up 2.09 billion yuan of the 13 billion yuan daily quota.
Total volume of A shares traded in Shanghai was 50.1 billion shares, while Shenzhen volume was 21.1 billion shares.