April 13, 2017 / 7:22 AM / 6 months ago

China stocks edge up, Xiongan zone in focus but economic outlook split

SHANGHAI, April 13 (Reuters) - Chinese stocks inched up on Thursday as investors continued to bet on stocks that could benefit from Beijing’s plan to build a vast new economic zone, though gains were capped by fears that policy tightening will crimp economic growth.

Worries over further increases in short-term interest rates and property cooling measures largely offset China’s March trade growth which exceeded expectations.

Also overhanging the market are regulators’ efforts to clamp down on speculation, after 14 companies announced that trading had been suspended in their shares.

The blue-chip CSI300 index rose 0.2 percent to 3,514.57 points, while the Shanghai Composite Index added 0.1 percent to 3,275.96 points.

China’s government hopes the new Xiongan economic zone near Beijing will see the same rapid growth as a similar zone launched in Shenzhen in 1980. That has kept Xiongan-related shares a hot investment theme, despite measures by regulators to cool speculation.

However, brokerage Shenwan Hongyuan said in its latest strategy report that thematic investments in concepts such as Xiongan are unlikely to change the current “range-trading” pattern of the market, which it attributed to policy concerns.

“Under the current macro environment, the government is stepping on the brakes using a combination of policy tools, such as real estate curbs and higher repo rates,” analyst Yao Liqi wrote.

“In such a backdrop, the market is lowering growth expectations and anticipating higher interest rates, thus, putting pressure on stock valuations.”

Fourteen Chinese companies suspended trading in their shares on Thursday, citing the need to further evaluate the potential impact on businesses from Xiongan. Some market participants suspect the concerted moves are the result of regulators’ intervention.

Most sectors were little changed.

Banks continued to drag, posting the fourth session of losses, as the nation’s banking regulator steps up efforts to contain risks in the financial system. (Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)

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