China shares fail to hold morning gains
- Shanghai Composite Index ends down on-day despite global rally
- Volatility on SHCOMP at near 18-month low
- Speculation grows that Shenzhen-Hong Kong stocks Connect to launch July 1
While global markets rallied, the fog wrapped its icy embrace around the
Shanghai Composite Index to send it into negative territory for the day. Photo: iStock
By Jay Luo
China's stock market opened higher today in tune with a global markets rally but dived in the afternoon session. The Shanghai Composite Index rose about 1% in the early session driven by brokerage stocks but ended the day 0.35% lower to 2,878.56.
There was speculation that the Shenzhen and Hong Kong Stocks Connect might be launched on July 1.
However, neither the chatter nor the global market rally could ignite bulls’ enthusiasm as market opinions were once again clearly divided and many investors continue to take a sideline pew. Total trading volume was about RMB 593 billion in Shanghai and Shenzhen Stock Exchanges.
The Growth Enterprise Market Index rose 1.56% in early session but closed 1.3% lower for the day.
There have been no big events or micro data in the China market since MSCI’s decision last Wednesday not to include A shares into its emerging market index. Chinese industrial output has been relatively stable, the inflation index and PPI showed signs of improvement, but fixed-assets investment and total social financing were decreasing.
The Chinese yuan exchange rate, Brexit and the US Federal Reserve’s July meeting, Shenzhen and Hong Kong Stocks Connect remain central to all market-related developments for now.
According to Bloomberg, volatility in Chinese stocks fell to the lowest level since January 2015 because of the lack of trading catalysts.
Chinese stocks volatility at lowest level since January 2015
Jay Luo is an editor and analyst at Saxo Capital Markets in China