SHANGHAI, July 18 (Reuters) – China stocks steadied on
Tuesday, aided by strong gains in cyclicals, even as investors
hunted for bargains after an intense sell-off in small-caps in
the previous session.
The blue-chip CSI300 index rose 0.1 percent, to
3,667.18 points, while the Shanghai Composite Index
added 0.3 percent to 3,187.57 points.
The tech-heavy start-up board ChiNext gained 0.7
percent. On Monday, it tumbled 5.1 percent to its lowest since
“The slump in major indexes on Monday was mainly driven by
sharp drops in start-up shares, as they forecast continued falls
in profit growth, with heavyweight start-ups leading the profit
decline,” Haitong Securities said in a report.
On Monday, China reported its economy grew an annual 6.9
percent in the second quarter, defying expectations for a slight
loss of momentum.
The growth data helped the Shanghai SE 50 Index,
dubbed China’s “nifty 50”, hit a two-year high on Monday, helped
by the growth data.
The root cause for the divergent performances in the SE 50
and the start-up index was investors’ preference for solid
fundamentals in a range-bound market, Haitong Securities said.
Analysts also expect MSCI’s decision to include China shares
into its key emerging markets index to further reinforce
investors’ focus on fundamentals rather than speculative
Global fund managers are ramping up their presence in China,
aiming to be well ahead of next June’s inclusion of
mainland-listed stocks into MSCI’s benchmark index that is
expected to boost investment into the $8 trillion equity market.
Sector performance was mixed.
Banks lost ground, while infrastructure
and the real estate sector led gains,
despite data showing China’s property market slowed in June as
top-tier cities cooled.
Investors continued to chase cyclical firms, including
steelmakers and coal miners, on expectations their mid-year
earnings will greatly improve as industries gain from
(Reporting by Luoyan Liu and John Ruwitch; Editing by Eric