China blue-chip index reverses gains; ChiNext sours sentiment

Reuters Updated - January 22, 2018 at 01:55 PM.

China’s blue-chip index CSI300 broke a four-day rising streak on Wednesday, as a late afternoon slump in start-up board ChiNext soured the market sentiment.

The CSI300 index surrendered earlier gains, dipping 0.3 per cent, to 3,866.38, while the Shanghai Composite Index lost 0.4 per cent to 3,636.09 points.

Tech-heavy ChiNext tumbled 2.2 per cent, as selling intensified toward the market close.

Sentiment was initially upbeat amid fresh signs that cash-rich insurers were on a shopping spree at the year-end, buying modestly-valued big caps.

But the late-afternoon sell-off reminded investors of the liquidity pressure from five companies that start taking subscriptions on Wednesday for their initial public offerings.

Some traders say the rally in blue-chips is still sustainable, although small-caps could weaken further.

“Insurers’ purchases have put blue-chips into the market’s spot light,’’ said David Dai, Shanghai-based investor director at Nanhai Fund Management Co.

He added that small-caps were more expensive and thus faced heavier selling pressure as a six-month share sale ban by major shareholders expires in early January.

Latest exchange filings showed that insurers have been boosting stakes in blue chips, including developer China Vanke Co, retailer Chang Chun Eurasia Group and Chinese traditional medicine maker Beijing Tongrentang Co.

Highlighting insurers’ intensified purchase activity, the official China Securities Journal estimated that in December alone, median-sized insurer Anbang Insurance Group had spent more than 30 billion yuan ($4.63 billion) buying stocks.

($1 = 6.4752 Chinese yuan)

Published on December 23, 2015 08:20