Stocks in China yesterday tumbled more than 2 percent, their biggest loss in a month, as weak industrial profit data and a looming revamp of how companies are to be listed weighed on the market.
Sentiment was also soured at the start of a holiday-shortened trading week by a slump in so-called “B shares” — stocks traded in Shanghai and Shenzhen, but denominated in hard currencies.
The blue-chip CSI 300 index dropped 2.9 percent to 3,727.63, while the Shanghai Composite Index fell 2.6 percent to 3,533.78 points. It was their biggest one-day percentage fall since Nov. 27.
Investors are concerned about the impact of imminent changes to the system for initial public offerings (IPOs), which could see China moving from an approval-based system toward a US-style registration system, potentially boosting share supply.
In a major step toward reform, China’s top council on Sunday approved a proposal to reform the IPO system, authorizing the government to kickoff the changes as early as March.
“The IPO reform is market-negative, because it puts pressure on stock valuations,” Cinda Securities Co (信達國際控股) strategist Gu Yongtao said.
The reform would make listings much easier, potentially reducing the need for backdoor listings, or flotation through buying listed companies, he added.
Investors drew little solace from data released on Sunday that showed a sixth consecutive month of decline in industrial companies’ profit last month.
Stocks fell across the board.
Selling intensified in the afternoon, as Shanghai’s B share index tumbled nearly 8 percent, the biggest one-day loss in four months.
The slump in B shares was partly triggered by profit-taking, as the index had risen for 13 sessions in a row, and surged nearly 50 percent over the past three months.
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