China start-ups have worst week in a year, earnings worries weigh

SHANGHAI, July 14 (Reuters) – China stocks ended mixed for
the week, with the blue-chip index closing at an 19-month high,
while start-ups had their worst week since last July, as
investors sought firms with solid fundamentals amid an extended
correction in small-caps.

The blue-chip CSI300 index rose 0.4 percent, to
3,703.09 points, while the Shanghai Composite Index
added 0.1 percent to 3,222.42 points.

For the week, CSI300 gained 1.3 percent, while SSEC inched
up 0.1 percent.

The tech-heavy start-up board index ChiNext
slumped 4.9 percent to post its worst week since July 2016, as
lacklustre first-half earnings forecasts deepened worries over
their growth prospects.

Many small-caps tumbled, losing as much as 30 percent or
more in the past week.

“We do not see any reason why investors will plough money in
growth stocks for now, given expectations of dim results at
these firms amid tight liquidity conditions,” said Yan Kaiwen,
an analyst with China Fortune Securities.

Investors are increasingly ditching speculative trading, and
putting money in firms that generate predictable incomes.
Companies reaping the benefits of an uptick in global demand
have found favour.

China posted stronger-than-expected June trade figures on
Thursday, bolstered by firm global demand for Chinese goods and
robust appetite for construction materials at home.

In a Reuters poll of 65 economists, China’s economic growth
was forecast to reach 6.6 percent this year, topping the
government’s target of around 6.5 percent.

For the week, bank stocks far outperformed the
broader market, advancing 5.1 percent, thanks to improved
profitability in those lenders amid largely stable economic
growth.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Shri
Navaratnam)

Leave a Reply

Your email address will not be published.