By Laura He, MarketWatch
Chinese stocks fell the most in four months on Thursday, as a selloff swept the financial sector after a unit of China’s sovereign-wealth fund reportedly cut its stakes in state-owned banks for the first time.
The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +1.60% sank 6.5% to 4,620.27, pulling back from a seven-year closing high after a seven-day bull run. That also marked its steepest daily percentage decline since Jan. 19, when the index dived 7.7% after China tightened up margin-trading rules.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +2.18% also declined 2.2%, falling the most in more than five months. The mainland-China-tracking Hang Seng China Enterprises was down 3.5%.
Filings to Hong Kong Exchanges & Clearing available Thursday revealed the move by China Central Huijin Investment Ltd., accordign to local media reports. The sovereign-wealth fund unit sold 300 million Shanghai-listed shares of Industrial and Commercial Bank of China Ltd. (ICBC) /zigman2/quotes/201401473/delayed HK:1398 +5.61% /zigman2/quotes/202525815/delayed CN:601398 +3.40% /zigman2/quotes/204265987/delayed IDCBF +1.35% and 280 million Shanghai-listed shares of China Construction Bank Corporation /zigman2/quotes/208974133/delayed HK:939 +5.28% /zigman2/quotes/208058581/delayed CN:601939 +5.53% /zigman2/quotes/209484779/delayed CICHF -3.45% on Tuesday, for a combined amount of more than 3.5 billion yuan ($560 million).
Other factors also weighed on markets, including news that several brokers have tightened up their margin-financing requirements in recent days. This includes increasing the amount of cash clients must put down for their deposits, as well as concerns about tighter liquidity ahead of a wave of initial public offerings next week.
Financial stocks suffered a wide selloff in Shanghai and Hong Kong.
Among major Chinese banks, China Merchants Bank Co., Ltd. /zigman2/quotes/209899244/delayed HK:3968 +6.60% /zigman2/quotes/210188047/delayed CN:600036 +5.69% /zigman2/quotes/209895294/delayed CIHHF -4.48% lost 6% and 3.8% in Shanghai and Hong Kong, respectively. Shanghai-listed shares of state-owned China Construction Bank Corporation sagged 5.9%, while its Hong Kong-traded stock shed 3.7%. ICBC declined 5% in Shanghai and fell 2.8% in Hong Kong.
Chinese securities firms also took a hard hit.
In Shanghai, Huatai Securuties Co., Ltd. /zigman2/quotes/208233190/delayed CN:601688 +1.00% sank 10%, and Citic Securities Co. Ltd. /zigman2/quotes/208139708/delayed HK:6030 +2.68% /zigman2/quotes/210326178/delayed CN:600030 +0.60% , Haitong Securities Co., Ltd. /zigman2/quotes/207313420/delayed HK:6837 +2.10% /zigman2/quotes/203443667/delayed CN:600837 +1.51% and Orient Securities Co. Ltd. /zigman2/quotes/207820122/delayed CN:600958 +1.47% all dropped more than 9%.
In Hong Kong, biggest decliners in the broker sector included Guotai Juan International Holdings Ltd. /zigman2/quotes/203308570/delayed HK:1788 +1.45% , down 4.5%, Southwest Securities International Securities Ltd. /zigman2/quotes/209320899/delayed HK:812 -1.27% , off 3.9%, and Citic Securities and Haitong Securities Co. Ltd., both lower by 3.4%.
However, other major Asian markets mostly gained.
Japan’s Nikkei Average /zigman2/quotes/210597971/delayed JP:NIK +0.51% rose for a tenth day in a row and ended up 0.4%, recording its longest winning streak since 1988. The Topix index /zigman2/quotes/210598092/delayed JP:180460 +0.51% also added 0.7%.
The yen /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1828% weakened against the greenback. The dollar bought ¥123.88, after hitting a 12-year high of ¥124.30 in earlier trading, compared with ¥123.67 late Wednesday in New York.
Elsewhere, Seoul’s Kospi Composite Index /zigman2/quotes/210598069/delayed KR:180721 +1.03% edged up 0.2%, while Sydney’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO +0.82% nudged 0.2% lower.