China’s main stocks indexes fell on Wednesday, as comments by Premier Li Keqiang raised concerns over an economic slowdown and regulatory tightening. The blue-chip CSI300 index fell 0.8 percent, to 3,646.17 points, while the Shanghai Composite Index lost 0.6 percent to 3,173.20 points. Most sectors lost ground, led by real estate and consumer stocks that rallied the most recently.
China is capable of achieving its full-year growth target and controlling systemic risks despite challenges, Premier Li Keqiang said on Tuesday, adding that maintaining medium to high-speed long-term growth will not be easy.
China has targeted 6.5 percent growth this year. The economy, which grew 6.9 percent in the first quarter, generally remained on a solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.
Li said Beijing has been taking steps to identify and resolve financial risks, to “uphold the bottom line of no systemic risks”, indicating tight financial regulations and liquidity conditions could continue as Beijing pushes forward deleveraging efforts.
However, there are signs of strong foreign appetite for Chinese blue-chips, after MSCI’s decision to include 222 Chinese “A-shares” in its emerging markets benchmark.
On Tuesday, Hong Kong’s biggest yuan-denominated exchange-traded fund (ETF) attracted its largest daily inflow this year. The CSOP FTSE China A50 ETF, which buys Chinese shares under the so-called RQFII scheme, drew inflows of roughly 1.5 billion yuan ($220.56 million).
Fund manager CSOP Asset Management attributed the jump in inflows to the high correlation between the FTSE China A 50 Index and MSCI’s A-share inclusion plan, as well as a stabilizing yuan.
MSCI’s inclusion would “help prop up the value of China’s quality blue-chips, and would help stabilize its stock market,” Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), told a seminar on Tuesday. Fang said China’s securities regulator will strive to reduce policy uncertainty and will adjust capital control mechanisms if necessary to expedite foreign investment in A-shares.