SHANGHAI: China’s main indexes weakened on Thursday morning, as consumer and health care firms fell, offsetting strong gains in resource stocks on expectations of robust mid-year results. The CSI300 index eased 0.5 per cent, to 3,640.32 points at the end of the morning session, while the Shanghai Composite Index lost 0.3 per cent, to 3,197.12 points.
China’s central bank skipped open market operations for the 10th day in a row on Thursday, citing “relatively high” liquidity levels in the banking system. “The draining recently indicates that the central bank will not send any signals of loosening, in order to maintain relatively balanced liquidity conditions,” Li Lifeng, an analyst with Sinolink Securities, wrote in a note. The defensive consumer and health care sectors slid in the morning, losing 1.3 per cent and 1.9 per cent, respectively, after enjoying a robust rally this year. While some doubt the strong trend in blue chips will continue, many analysts see little chance for a major downturn in stocks with solid fundamentals. Resource stocks outperformed the broader market, underpinned by expectations of greatly improved profitability amid an industry recovery and a weaker dollar, with many starting to issue upbeat forecasts for mid-year performance. An index tracking major material shares hit a 3-month high, and is set for the fifth straight week of gains. Nonferrous industry bellwether China Molybdenum leapt 6.2 per cent to a 19-month high, after advancing 7 per cent the previous session. The stock had surged 48 per cent in 2017.
In Hong Kong, stocks followed other Asian markets lower, after minutes from the Federal Reserve’s last meeting showed a lack of consensus on the future pace of U.S. interest rate increases. The Hang Seng index dropped 0.3 per cent, to 25,440.35 points. The Hong Kong China Enterprises Index lost 0.7 per cent, to 10,307.20. Shares in Tencent steadied after volatile trade in previous sessions. The gaming and social media firm said it would limit play time for some young users of its top-grossing mobile game, responding to criticism that children were getting addicted.