China Shares Tumble As Recent Buying Binge Leaves Hangover

Shares in mainland China plunged Thursday, extending a recent sell-off after a surge this month, while Hong Kong was hit by concerns about a spike in virus infections at home and around the world

Hong Kong, (UrduPoint / Pakistan Point News - 16th Jul, 2020 ):Shares in mainland China plunged Thursday, extending a recent sell-off after a surge this month, while Hong Kong was hit by concerns about a spike in virus infections at home and around the world.

Data showing China's economy expanded more than expected in the second quarter was unable to offset the glum mood, with observers pointing out that retail sales, a gauge of the crucial consumer sector, remained weak.

The benchmark Shanghai Composite Index sank 4.50 percent, or 151.21 points, to 3,210.10 while the Shenzhen Composite Index on China's second exchange tumbled 5.20 percent, or 117.55 points, to 2,144.25.

The Hang Seng Index in Hong Kong shed 2.00 percent, or 510.89 points, to 24,970.69.

Shanghai had surged more than 15 percent from the start of the month, sparking concerns that a bubble was developing as the world's second-largest economy regains momentum following coronavirus lockdowns.

But they have been dropping off this week on profit-taking, with some analysts also suggesting state-backed funds have been unwinding some investments as they try to avoid another market bust similar to one in 2015 that sparked a global rout.

"In previous days, the market gained a lot over the short term so many investors took profits today," said Yang Delong, a chief economist at First Seafront Fund.

"Another negative signal that also dented the entire market was heavyweight share Kweichow Moutai's plunge, after the (state-controlled) People's Daily criticised it, saying the liquor was used for corruption," Yang added.

Kweichow Moutai is the world's largest distiller, its fiery alcohol a popular gift item.

But the company is also frequently the target of officials, who say bottles of the grain-based tipple are often given as bribes in business and government circles.

Kweichow Moutai dropped 7.90 percent to end at 1,614.00 yuan. It's rival Wuliangye Yibin plunged the maximum allowable 10 percent, ending at 201.56 yuan.

Bank of China fell 0.87 percent to 3.40 yuan and China Merchants Bank sank 0.73 percent to 35.60 yuan.