China’s CSI 300 Index unwound an earlier loss of as much as 2% as investors hunted for bargains, as well as seeking cues from the National People’s Congress that began on Friday.
The gauge was little changed as of 2:27 p.m. in Shanghai and the mainland’s largest stock, Kweichow Moutai Co., was the strongest positive contributor. The CSI is close to avoiding a technical correction after losses earlier extended to more than 10% from the Feb. 10 peak.
“Today the sentiment is one of buying the dip, with Moutai’s hitting 2000 yuan being a trigger,” said Zhang Fushen, senior analyst at Shanghai PD Fortune Asset Management (LLP). “All of the expensive sectors have fallen significantly and are threatening to destroy their uptrend, but without a massive change in fundamentals and expectations, there’s no reason for them to fall further and reverse from bull to bear.”
Shares of liquor maker Kweichow Moutai climbed as much as 3.1%, reversing an earlier decline of 2.2%. Its peer Wuliangye Yibin Co. also rose.
The CSI 300 sank the most since July on Thursday, while a measure of two-week volatility spiked to a seven-month high, as investors worried about liquidity tightening and official concern about possible asset bubbles. The recent rout has been driven by consumer staples, with the sub-gauge falling about 20% since Feb. 10.
Moutai’s $113 Billion Tumble Is Hammering Chinese Mutual Funds
‘Overly Pessimistic’
China set an economic growth target of above 6% for the year, well below what economists forecast, and outlined ongoing fiscal support with prudent monetary policy. The government will narrow the budget deficit to 3.2% of gross domestic product this year from 3.6% in 2020, Premier Li Keqiang said Friday at the opening of the NPC.
The GDP target is “by no means a low figure and earnings in the nation’s top companies are sure to well exceed that,” said Chen Shi, a fund manager at Shanghai Jade Stone Investment Management Co. “Markets globally have become overly pessimistic on liquidity and in reality, they might be scaring themselves too much.”
Meanwhile, things were quiet Friday in currencies and rates. The onshore yuan was little changed at 6.4751 per dollar. The yield on China’s 10-year bonds was also little changed at 3.26%.
https://finance.yahoo.com/news/china-csi-300-index-falls-013552768.html