Chinese stocks tumble as ECB and China data spark concerns

Major Chinese stocks saw out the week with their biggest one-day fall since October, after a policy pivot from the European Central Bank set off concerns about global growth while China itself reported some muted trade numbers.

The CSI 300 index of Shanghai and Shenzhen-listed stocks finished the day down 4 per cent after official data from Beijing showed China’s exports had slumped almost 21 per cent in February compared with a year ago.

Adding to investor nerves: a maximum fall of 10 per cent for People’s Insurance Company Group after analysts at brokerage Citic Securities issued a rare “sell” rating on the company. The company’s Shanghai-listed shares had more than doubled this year, as of Thursday’s close.

The drop came a day after the ECB surprised markets with new measures to address the eurozone’s slowing growth, as it pushed back the timeline for an increase in interest rates to 2020 at the earliest.

“We find little reason to expect a rebound in the near term on the back of a sluggish global electronics cycle,” said Raymond Yeung, chief economist for greater China at ANZ. He added that weak external demand would “continue to weigh” on the world’s second largest economy. “This requires a stronger dose of policy stimulus to support growth,” he added.

The fall marked the worst daily performance since a drop of 4.8 per cent on October 11 for mainland stocks, while in Hong Kong the Hang Seng China Enterprises index of major mainland Chinese companies was off 2.6 per cent in afternoon trading. Hong Kong’s broader Hang Seng index fell 2 per cent.

The dip for Chinese stocks pushed the CSI 300 down enough to leave it 0.4 per cent below its closing level at the end of February. That completely erased gains made since MSCI, the index provider, announced a decision to increase the weighting of mainland-listed stocks in its flagship emerging markets index, an influential benchmark tracked by $1.9tn of funds.

However, Alexander Treves, an investment specialist for emerging markets and Asia Pacific equities at JPMorgan Asset Management, cautioned against viewing Friday’s fall in isolation. Even at its lowest point on the day, the index of large-cap stocks was still up more than 21 per cent for the year to date.

“China’s a volatile market. Over the next year, there will be lots of big positive days and lots of negative days,” Mr Treves said. “What might feel like a bear market in the US feels a little bit like something more common-or-garden in the context of a more volatile asset class like A-shares.”