February 27, 2017 / 4:50 AM / 5 months ago

China stocks fall on tighter regulation, IPO worries; HK flat

3 Min Read

* SSEC -0.3 pct, CSI300 -0.3 pct, HSI 0.1 pct

* Regulators step up fight against misbehaviour, hints on more IPOs

* Chinese insurers the main contributor of southbound trading this year-UBS

SHANGHAI, Feb 27 (Reuters) - China stocks slipped on Monday after the securities regulator vowed to step up its campaign against speculation and hinted about loosening its grip on new share offerings - moves that would benefit the market in the long term, but hurt sentiment in the short run.

Hong Kong stocks were little changed, as the market's strong rally since mid-February showed signs of fatigue.

Both the CSI300 index and the Shanghai Composite Index lost 0.3 percent by the lunch break, to 3,464.35 points and 3,244.71, respectively.

Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), told a news conference on Sunday that the country will focus on stable development of its capital markets this year.

But limiting or halting initial share sales in order to stabilise the secondary market doesn't "solve the problems of long-term healthy development of capital markets," Liu added, stirring worries of increasing equity supply this year.

The remarks followed a regulator's move over the weekend to punish the insurance unit of financial conglomerate Baoneng Group for speculative trading, and a 3.48 billion yuan ($506.96) penalty on investor Xian Yan for market misbehaviour.

"This shows that regulators are taking a tough stance against speculative trading," Li Lifeng, analyst at Sinolink Securities, wrote.

"This will purify China's share market, but will have a negative impact on those stocks with excessive valuations."

Baoneng Group's listed units, including Nanning Department Store, CSG Holding and Jonjee Hi-tech Industrial and Commercial Holding tanked in response to the regulator's moves.

Most sectors fell in China, but the resources sector rose, aided by index heavyweight Baowu Iron & Steel . The stock, previously known as Baoshan Iron & Steel Co Ltd, shot up 7.7 percent following a one-month trading halt.

Baoshan's acquisition of its smaller debt-laden rival Wuhan Iron and Steel created the world's second-largest steel producer as part of Beijing's push to overhaul the stricken industry.

Hong Kong

In Hong Kong, the Hang Seng index added 0.1 percent, to 23,984.70, while the Hong Kong China Enterprises Index lost 0.2 percent to 10,395.93.

Gao Ting, head of China strategy at UBS Securities, said although regulators have set risk prevention as their main emphasis, reducing the chance of aggressive buying by insurers on the secondary market, still, "we expect insurers to be the main contributor of southbound trading this year."

Samuel Shen and John Ruwitch; Editing by Kim Coghill

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below