China shares dropped on Monday after a shock contraction in Chinese exports reflected a slowdown in the world's second-largest economy, but the government's tax-cut plans to boost growth curbed further declines.At the midday break, the Shanghai Composite index was down 0.56 percent at 2,539.59 points. China's blue-chip CSI300 index was down 0.77 percent, with its financial sector sub-index dropping 0.68 percent and the healthcare sub-index slipping 2.15 percent. Chinese H-shares listed in Hong Kong dropped 1.49 percent to 10,299.09 points, while the Hang Seng Index was down 1.38 percent at 26,299.19.
China's December exports unexpectedly fell the most in two years and imports contracted, official data showed on Monday, pointing to further weakening in the world's second-largest economy and soft global demand. "We believe trade growth next year will slow significantly on huge uncertainty and high base," analysts at Citi said in a note. "Despite increased optimism after (the) Trump-Xi summit in Argentina, significant uncertainty remains as to whether there could be a "deal" after March 1," the note added. Car makers in China are bracing for zero to tepid growth in sales this year, after a tough 2018 when the world's top auto market probably contracted for the first time in two decades, as slowing economic growth drags on demand.
Automakers are down, with Warren Buffett-backed electric car maker BYD Co Ltd down 2.02 percent in Shenzhen and down 4.84 percent in Hong Kong. Geely Automobile Holdings Ltd is down 2.88 percent. Chinese banking shares dropped after the banking regulator said on Friday that commercial banks' non-performing loan (NPL) ratio hit a 10-year high of 1.89 percent at the end of 2018 amid slowing economic growth. The CSI China mainland banks index is 0.4 percent lower. China plans to reduce restrictions on foreign investment and address difficulties facing foreign companies investing in the country, the country's commerce minister said on the weekend. The human resources ministry said it would roll out measures to maintain stable employment. ** China's foreign exchange regulator said it would double the quota for the Qualified Foreign Institutional Investor (QFII) programme to meet demand from overseas investors.
The inclusion of Chinese A-shares in global stock indexes could see foreign inflows into China's stock market double in 2019, the vice chairman of the China Securities Regulatory Commission said. Premier Li Keqiang said China's plans for tax cuts targeting smaller companies will help to support employment and economic stability, and will expand the country's tax base over the long term. The smaller Shenzhen index was down 0.7 percent and the start-up board ChiNext Composite index was weaker by 1.05 percent. Around the region, MSCI's Asia ex-Japan stock index slipped 0.96 percent, while Japan's Nikkei index rose 0.97 percent. The yuan was quoted at 6.7558 per U.S. dollar, 0.16 percent firmer than the previous close of 6.7666.
The largest percentage gainers in the main Shanghai Composite index were Xining Special Steel Co Ltd, which rose 10.14 percent, followed by Yunnan Coal & Energy Co Ltd , which gained 10.1 percent and Ningxia Jiaze Renewables Corp Ltd, which climbed 10.09 percent. The largest percentage losses in the Shanghai index were Zhongchang Big Data Corp Ltd, which slipped 9.99 percent, followed by Changshu Fengfan Power Equipment Co Ltd , which lost 9.96 percent and Beijing Tiantan Biological Products Corp Ltd, which fell 9.31 percent. So far this year, the Shanghai stock index rose 2.4 percent, while China's H-share index climbed 3.3 percent. Shanghai stocks rose 2.4 percent so far this month.
The top gainers among H-shares were China Merchants Bank Co Ltd, up 0.83 percent, followed by Anhui Conch Cement Co Ltd, gaining 0.66 percent and Guangdong Investment Ltd, up by 0.53 percent. The three biggest H-shares percentage decliners were BYD Co Ltd, down 4.84 percent, Huaneng Power International Inc, down 4.3 percent and Air China Ltd, which is 3.6 percent lower. In Hong Kong, the sub-index of the Hang Seng index tracking energy shares declined 2 percent, while the IT sector fell 2.3 percent. The top gainer on the Hang Seng was Wharf Real Estate Investment Company Ltd, up 0.52 percent, while the biggest loser was CNOOC Ltd, which was down 3.43 percent.
(With inputs from agencies.)