By Laura He, MarketWatch
Reuters Enlarge Image
Hong Kong stocks on Monday suffered their biggest percentage decline in four months, as worries over China’s new rules to curb margin trading and boost short-selling offset the central bank’s latest move to relax monetary policy and spur economic growth.
The Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +2.19% declined 2% to close at 27,094.93, down the most since early December. The mainland-China-tracking Hang Seng China Enterprises /zigman2/quotes/210598031/delayed CN:160462 +2.15% slid 2.9% to 14,111.34, marking its steepest fall in three months.
Over on the mainland, the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +1.55% ended sharply lower after a volatile session, down 1.6% at 4,217.08. The index had briefly gained 1.1% in the morning session and touched a new seven-year intraday high of 4,356.00. By the end of afternoon trade, all gains were erased.
The weakness came after China’s top securities regulator unveiled on Friday a raft of measures to curb margin trading, while also allowing fund managers to lend stocks for short-selling and expanding the list of shares which can be sold short. However, the regulator stressed a day later that there was no desire to “suppress” the hot stock market, but rather to improve its stability and healthy development.
The People’s Bank of China also made further moves Sunday to relax its monetary policy amid the economic slowdown, staging its biggest cut to banks’ reserve requirement ratio in more than six years and releasing about $200 billion in liquidity for banks to lend.
In Hong Kong, brokerage shares sank in the wake of the tighter margin rules, as Haitong International Securities Group Ltd. slid 10%, China Everbright Ltd. /zigman2/quotes/209679060/delayed HK:165 +1.60% sagged 9.7%, Shenyin Wanguo HK Ltd. /zigman2/quotes/208006958/delayed HK:218 +1.80% shed 7.9%, Guotai Junan International Holdings Ltd. /zigman2/quotes/203308570/delayed HK:1788 +0.72% declined 7.3%, and Citic Securities Co. Ltd. /zigman2/quotes/208139708/delayed HK:6030 +2.68% lost 7%.
Major Chinese lenders had posted brief gains in the morning after the central bank cut the reserve requirement ratio, but those gains were surrendered by the close of trade.
China Minsheng Banking Corp. Ltd. /zigman2/quotes/208095167/delayed HK:1988 +3.26% retreated 4.2%, China Merchants Bank Co., Ltd. /zigman2/quotes/209899244/delayed HK:3968 +6.60% dropped 3.4%, China Citic Bank Corporation Ltd. /zigman2/quotes/205809997/delayed HK:998 +2.72% fell 3.2%, and Bank of China Ltd. /zigman2/quotes/204682472/delayed HK:3988 +4.09% gave up 2.6%.
Most other Asian markets posted losses. Japan’s Nikkei Average /zigman2/quotes/210597971/delayed JP:NIK +0.51% inched down 0.1%, and the Topix /zigman2/quotes/210598092/delayed JP:180460 +0.51% was off 0.4%. The yen /zigman2/quotes/210561789/realtime/sampled USDJPY +0.1725% was slightly higher against the greenback, with the dollar at ¥118.83, compared with ¥118.95 late Friday in New York.