Shares in China fall sharply, set to snap a winning streak

SHANGHAI (Reuters) – Shares in mainland China fell on Wednesday and were poised to snap a 10-day winning streak after officials failed to inspire confidence in stimulus plans aimed at reviving the economy.

Wednesday’s moves were a reversal from the day before, after mainland Chinese stocks returned from a week-long holiday while Hong Kong stocks stuttered.

As of 0239 GMT, the benchmark Shanghai Composite was down 5.3 percent, while the CSI300 was down 5.8 percent.

The A-share market made up of shares listed in Shanghai, Shenzhen and Beijing had an earlier day’s ride after returning from a week-long holiday, with turnover hitting a record 3.485 trillion yuan (493, 17 billion dollars).

Hong Kong’s Hang Seng index is one of the best performers of major global markets this year, after experiencing its steepest rise in a generation in recent weeks. It fell 1.9% after starting the day higher.

“The market is widely anticipating a fiscal stimulus announcement this month, something like 2-3 trillion yuan is the range being talked about,” said Alvin Tan, head of Asia FX Strategy at RBC Capital Markets.

“The recent bullish sentiment on Chinese assets is based on the expectation of a major fiscal stimulus package, so sentiment will change quickly if we don’t get a package that at least matches the range above.”

Tourism shares were among the biggest losers on Wednesday as data showed spending during the Golden Week holiday had yet to return to pre-Covid levels. An index tracking the performance of the sector lost 7.8%.

Separately, property shares were another big drag on the market. The CSI 300 Real Estate Index fell 9.7%.

“Certainly, the impact of the support measures will take time to unravel,” said Samuel Tse, an economist at DBS, in a note.

“A sustained recovery in property and consumption, particularly in tier 2-3 cities, requires additional stimulus and a lasting positive wealth effect from the equity market.”

In overseas markets, Singapore-traded FTSE China A50 futures fell about 1.5 percent.

(1 USD = 7.0665 Chinese Yuan)

(Reporting by Shanghai Newsroom; Editing by Jamie Freed)