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Jeanny Yu

Mainland Chinese stocks rose on Monday for the third consecutive trading day, led by technology and property shares, as fresh data showed improvement in the property market and the securities regulator reiterated there was no plan to withdraw funds pumped into the market in recent days.
The Shanghai Composite Index swung between gains and losses in volatile trade before ending in positive territory.
Profit taking ensured it stayed below  the psychologically important 4,000-point level, even after a China Securities Regulatory Commission spokesman denied a report by Caijing magazine that Beijing was mulling plans to pull out capital it had injected into the market over the past two weeks.
The Shanghai index rose 0.88 per cent to close at 3,992.11 points, while the CSI 300 Index of the largest listed companies in Shanghai and Shenzhen finished 0.22 per cent firmer at 4,160.61 points.
The Shenzhen Composite Index jumped 1.82 per cent to 2,230.29 points and the ChiNext Index closed 2.33 per cent higher at 2,848.3 points.  
The valuation gap between mainland Chinese A shares and their Hong Kong counterparts H shares continued to widen, with the Hang Seng AH Premium Index showing  mainland Chinese shares are now nearly 44 per cent more expensive than their H shares.
The  Hang Seng Index slipped  0.04 per cent  to 25,404.81 points and the H-share index lost  0.64 per cent to 11,773.92 points.
“The benign commodity cycle is a key positive for the Asian region overall, yet the widening premium in [mainland]  shares over H shares and extended valuations suggest the  [mainland] market may have become overheated,” said Rahul Chadha, a co-chief investment officer at Mirae Asset Global Investments (HK). “The [economic] recovery is likely to be slow and long drawn-out as poor capital output ratios and overinvestment would deter fresh investment cycles.”
Caution persisted in the mainland Chinese market, with about 24 per cent of the stocks –  148 in Shanghai, 431 on Shenzhen’s main board and 100 on ChiNext –  remaining suspended.
HSBC strategist Steven Sun attributed the unprecedented trading halt  to the rapid increase in loans pledged with stocks.  
About 1,300 stocks  are involved in such borrowing, with the combined outstanding amount borrowed over the past three years standing at about 2.5 trillion yuan (HK$3.16 trillion), according to HSBC.
The drop in the value of stocks in the  rout had forced trading halts in these stocks and remained a downside risk for the earnings performances of brokers and banks, Sun said.
Property shares outperformed yesterday after new data showed home prices rose last month for a second consecutive month,  suggesting government efforts to boost the struggling sector are showing results.
 Top property developer China Vanke rose 1.86 per cent to 15.35 yuan.  
 Funds also continued to flow into new economy stocks, such as technology and aerospace-related companies. 
 
 


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Caution remains in the Chinese market, with 148 stocks in Shanghai, 431 on Shenzhen’s main board and 100 on ChiNext still suspended from trading. Photo: AP

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