* SSEC -0.2 pct, CSI300 -0.3 pct, HSI -0.1 pct
* Opening of China’s markets helps rotation into blue chips
* Materials stocks supported by GDP data
SHANGHAI, July 21 (Reuters) – China’s stocks slipped on
Friday morning, but were set to end the week higher, led by
strong gains in blue chips, as investors sought firms with solid
growth prospects and lower valuations amid tighter financial
regulations and liquidity conditions.
The CSI300 index fell 0.3 percent, to 3,736.13
points at the end of the morning session, retreating from an
18-month high, while the Shanghai Composite Index lost
0.2 percent, to 3,238.15 points.
Both indexes were set to end the week higher, erasing losses
earlier this week when investors dumped start-ups stocks.
“Blue chips found favour with investors as they attach great
importance to performances and valuations at listed firms due to
curbed risk appetite amid tighter financial regulations and
liquidity conditions,” said Xu Wei, analyst with Hongxin
Xu expected the tighter financial regulations to continue as
a largely stable economy allow Beijing more leeway to tackle
Among blue chips, Shanghai-listed China Molybdenum Co Ltd
, a major non-ferrous metals producer in China, has
gained 14.8 percent this week. The stock is up more than 40
percent in July.
China’s economy expanded 6.9 percent in the second quarter,
defying expectations for a slight loss of momentum in growth.
Fitch Ratings said on Thursday China’s renewed commitment to
contain financial risks signals a possible shift away from high
economic growth targets, though policymakers are likely to
remain cautious about tightening too aggressively.
China’s opening up its stock market to foreign investors by
the Shanghai, Shenzhen and Hong Kong connect programmes, as well
as by the MSCI’s decision to include China stocks, also helped
prompt a rotation into blue chips, Xu added.
U.S. index provider MSCI’s has agreed to add 222
China-listed large-cap stocks to its Emerging Markets Index
(EMI), tracked by around $1.6 trillion. China
Molybdenum is among them.
In sharp contrast with strong gains in blue chips, the
tech-heavy start-up board ChiNext still hovered
around 30-month lows after slumping 5.1 percent on Monday, as
market participants shunned firms that feature dim performance
and higher valuations.
The index is almost 60 percent below a record high hit in
For the week, materials shares are set to be the best
performers, helped by expectations China would continue to push
supply-side reforms and keep its economy largely stable.
An index tracking major raw material firms has
leapt nearly 5 percent this week, far outperforming the broader
market, after they forecast surges for mid-year earnings growth.
Hong Kong stocks edged lower, as investors paused for a
breath after the benchmark index hit a fresh two-year high on
The Hang Seng index dropped 0.1 percent, to 26,706.31
The Hong Kong China Enterprises Index lost 0.6
percent, to 10,777.54 points.
Most sectors lost ground, while utilities sector gained 1.8
percent, aided by a strong rally in Power Assets Holdings
after the company declared a dividend of HK$8.27 per
(Reporting by Luoyan Liu and Andrew Galbraith; Editing by Sam