China stocks down, Li’s remarks raise growth, regulatory concerns

SHANGHAI, June 28 (Reuters) – 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.
($1 = 6.8008 Chinese yuan renminbi)
(Reporting by Luoyan Liu and John Ruwitch)

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