(Bloomberg) — Chinese stocks pared most of their early gains on Monday, showing once again that Beijing’s efforts to boost markets are falling flat in the face of economic worries.
Most Read from Bloomberg
After opening 5.5% higher on a slew of market support measures announced over the weekend, the CSI 300 Index of mainland stocks pared its advance to close just 1.2% higher. Foreign funds accelerated their selling through the day, poised to take this month’s outflows to the biggest on record.
Traders had been expecting more forceful steps after recent efforts by authorities failed to arrest the market’s slide. Measures announced Sunday included a reduction in the levy charged on stock trades, restrictions on share sales by top stakeholders at some firms, and lower deposit ratios for margin financing. The China Securities Regulatory Commission also said it will slow the pace of IPOs.
Monday’s price action suggests that foreign investors need to see concrete steps aimed at reviving the economy before returning to China’s equity market, one of the world’s worst performers in August. While Beijing has been taking steps to lift market sentiment, the country’s economic slowdown is due to structural and entrenched problems that are proving harder to fix.
“The open today was a bit too strong, and that level of hype understandably leads to some people walking away from the table,” said Lin Menghan, a fund manager at Shanghai Xiejie Asset Management Co. “The measures overall addressed the issues of outflow and dilution of funds in the market, rather than where the fresh liquidity will come from.”
READ: Everything China Is Doing to Juice Its Flagging Economy
Story continues
Data Sunday showed the decline in China’s industrial profits persisted in July, the latest reading to confirm the dire state of the economy that has lapsed into a deflation.
Global funds sold the equivalent of $1.1 billion of mainland shares on a net basis via trading links with Hong Kong, according to data compiled by Bloomberg.
Stamp Duty
China last cut the stamp duty in April 2008,…
..
