SHANGHAI: China stocks slipped on Friday morning, led down by small-caps as lacklustre first-half earnings forecasts deepened worries over their growth prospects. The CSI300 index fell 0.1 percent, to 3,683.99 points at the end of the morning session, while the Shanghai Composite Index lost 0.2 percent, to 3,212.46 points.
The start-up board index ChiNext slid 1.2 percent to a five-week low, as many stocks that have seen fast growth have forecast sharp drops in mid-year earnings. The index is poised to have its worst week since mid-December. “We do not see any reason why investors shall plow money in growth stocks for now, given expectations of dim results at these firms amid tight liquidity conditions,” said Yan Kaiwen, an analyst with China Fortune Securities. Yan said that a crisis at tech company Leshi Internet Information, a listed unit of the struggling Chinese conglomerate LeEco, could exacerbate fears over start-ups. The market value of Leshi Internet Information could fall around $2.5 billion should its shares resume trading, showed estimates from three mutual fund investors. There was scant market reaction to news that Fitch maintained its A+ rating on China with a stable outlook, citing the strength of the country’s external finances and macroeconomic record.
In a Reuters poll of 65 economists, China’s economic growth is expected to reach 6.6 percent this year, topping the government’s target of around 6.5 percent. The defensive consumer and healthcare sectors led declines in the morning. Shares in Wangsu Science & Technology and Guangdong Wens Foodstuff both slumped more than 6 percent, after forecasting sharp declines in earnings for the first half. Hong Kong stocks edged higher, aided by gains in other Asian markets, which rose for the fifth straight session, as signs the Federal Reserve will pursue a gradual rate tightening path and hopes of a strong earnings season continued to lift appetites for risk assets. The Hang Seng index added 0.1 percent, to 26,364.21 points. The Hong Kong China Enterprises Index gained 0.2 percent, to 10,694.46.