Chinese stocks tumble as investors seek more clarity in US-China talks

Chinese shares closed weaker on Monday, retreating from gains hit in the previous week, on profit-taking and as investors seek more clarity in the U.S.-China trade negotiations, but hopes that Beijing's policy will bolster growth curbed losses. ** At the close, the Shanghai Composite index was down 0.05 per cent at 3,244.81. The index gained more than 5 per cent last week. ** The blue-chip CSI300 index ended down 0.12 per cent, with its financial sector sub-index lower by 0.15 per cent, the consumer staples sector up 0.86 per cent, the real estate index down 0.69 per cent and the healthcare sub-index closed 1.23 per cent weaker.

The smaller Shenzhen index ended down 0.55 per cent and the start-up board ChiNext Composite index closed 2.116 per cent weaker. ** The office of the U.S. Trade Representative said "significant work remains" in trade talks with China ahead of new discussions scheduled to resume this week. ** Adding to profit-taking pressure, foreign investors were net sellers of A-shares on Monday, with Refinitiv data showing net outflows through the Northbound legs of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect schemes. 

In an effort to support the economy, China will step up its policy of targeted cuts to banks' required reserve ratios to encourage financing for small and medium-sized businesses that play a key role in economic growth. ** "Looking at the market environment this week, macro-economic data is showing signs of improvement at the margins, a policy is turning more positive, and cuts to taxes and fees are continuing to strengthen," analysts at Dongguan Securities said in a note. ** "Add to that the steady progress in U.S.-China trade talks and foreign inflows reigniting the popularity of China's market, there is still some room for the index to expand its recovery," analysts added.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.1 per cent, while Japan's Nikkei index closed down 0.21 per cent. ** At 0718 GMT, the yuan was quoted at 6.7194 per U.S. dollar, 0.02 per cent weaker than the previous close of 6.7178. ** The largest percentage gainers in the main Shanghai Composite index were Danhua Chemical Technology Co Ltd, which closed up 10.08 per cent, followed by Lanhai Medical Investment Co Ltd, which ended up 10.08 per cent and Anhui Liuguo Chemical Co Ltd, which closed 10.08 per cent firmer.

The largest percentage losses in the Shanghai index were WPG (Shanghai) Smart Water Public Co Ltd, which ended down 10 per cent, followed by Healthcare Co Ltd, which closed 9.99 per cent lower and Shanghai Sunglow Packaging Technology Co Ltd down by 9.61 per cent. ** So far this year, the Shanghai stock index is up 30.1 per cent and the CSI300 surged 34.8 per cent, while China's H-share index listed in Hong Kong is up 16.2 per cent. Shanghai stocks climbed 4.98 per cent so far this month.

(With inputs from agencies.)