China Shares Fluctuate As Investors Anticipates Policy Support Moves

On Monday, China stocks fluctuated between gains and losses as traders remained cautious after lenders kept borrowing charges steady.

The CSI 300 Index fell 0.1 percent in the morning session, taking away a 0.5 percent gain earlier in the day. The market was pulled down by rate-sensitive financials and real estate developers. The Hang Seng China Enterprises Index fell 0.4 percent after earlier gains of up to 2.2 percent.

Traders were concerned as Chinese lenders kept the loan prime rate steady, as they looked for other policies to prolong the recent advance. On March 16, a top financial committee chaired by Vice Premier Liu pledged to make monetary policy more proactive in order to strengthen the economy and stabilize global markets, fueling anticipation of more relief.

Last week’s volatile market, when Chinese stocks staged a spectacular comeback after a historic two-day selloff as officials stepped in, is followed by Monday’s volatile stock market. The HSCEI index had risen 21% in two days, the highest level since 1998.

 Another concern is whether the upward trend will continue. The state-run Chinese Securities Journal urged investors to be hopeful about the local stock market because of policy support on Monday. According to the publication, 30 Shanghai-listed firms have suggested stock buybacks totaling roughly 10 billion yuan ($1.6 billion) this month to boost confidence.

Meanwhile, a measure of Chinese real estate developers dropped 2.9 percent. Beijing’s supportive actions, according to Moody’s, would not alleviate default threats for developers, and China Evergrande Group, which is heavily in debt, has halted trade. The CSI 300 financials index, which fell as much as 1.6 percent, also underperformed the market.

Market players are anticipating a drop in the reserve requirement ratio in the near future, and also a fall in the mid-term lending facility rate next month.

Investors are also keeping an eye on developments in the Ukraine conflict amid Presidents Xi Jinping and Joe Biden’s talks on Friday. After Xi convinced Biden that his country did not desire the war, China’s top representative to Washington stated that his country “would do everything” to abate the conflict in Ukraine.

Trading in China Evergrande shares stopped

 According to a report by the Hong Kong stock exchange, shares of the troubled property developer China Evergrande Group (3333.HK) were halted from trading on Monday.

According to market reports, trading in the company’s property services subsidiary, Evergrande Property Services Group Ltd (6666.HK), and its electric vehicle division, China Evergrande New Energy Vehicle Group Ltd (0708.HK), was also stopped.

Evergrande, the world’s highest indebted company with over $300 billion in debts, has been battling to repay suppliers and creditors while also completing projects and homes.

According to a firm lawyer’s statement to the Shenzhen Stock Exchange on Sunday, its main subsidiary Hengda Real Estate Group Co Ltd received consent from its domestic stakeholders over the weekend to postpone a dividend payment due last September to September 2022.

On March 18-19, Hengda conducted a meeting with stakeholders of the 4 billion yuan ($629 million) 2025 bond to ratify the payment of interest owed from September 2020 to September 2021, which would be paid in September 2023.

Evergrande has omitted technical bond failures in the domestic market so far, but it has missed payments on several overseas notes.

Before the suspension, Evergrande’s stock was trading at HK$1.65. After plummeting 89 percent in 2021, they have gained 3.8 percent this year.

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