China stocks slip on worries over pace of recovery

Chinese stocks dropped on Thursday as officials warned of protracted pressure on economic growth, casting a shadow over hopes for a sustained and strong recovery. ** At the midday break, the Shanghai Composite index was down 0.7 per cent at 3,178.95 points. The blue-chip CSI300 index slipped 0.7 per cent. ** CSI300's financial sector sub-index slid 0.3 per cent, the consumer staples sector gained 0.1 per cent, the real estate index was down 0.4 per cent and the healthcare sub-index rose 0.6 per cent. ** Chinese H-shares listed in Hong Kong fell 0.5 per cent, while the Hang Seng Index was down 0.1 per cent at 29,786.01 points.

The smaller Shenzhen index dipped 0.1 per cent and the start-up board ChiNext Composite index was weaker by 0.5 per cent. ** The Chinese leadership is "keenly aware that China's economy still faces downward pressure," reiterating that Beijing will cut taxes to help businesses, state television quoted Premier Li Keqiang as saying on Wednesday. ** China's central bank has no intent to tighten or relax monetary policy, a vice governor said on Thursday, adding that its use of reverse repos or a medium-term lending facility (MLF) does not signal it has a loosening bias.

The comments came a day after the People's Bank of China (PBOC) went for a targeted injection of funds in the markets on Wednesday, rather than more sweeping system-wide cash infusions, suggesting a weaker-than-expected stimulus. Government bond futures traded sharply lower on Wednesday. ** Reuters previously reported that the PBOC will likely pause to assess conditions before making any more bolder policy moves, amid better-than-expected growth data.

"Given that the real economy has not completely stabilised, and that small and medium enterprises still face financing pressure, the probability of (the PBOC) tightening liquidity on the margins is relatively low," Chuancai Securities' analysts wrote in a memo on Thursday. ** The PBOC said on Thursday it will accelerate efforts to set up a policy framework to lower reserve requirement ratios (RRRs) for small- and medium-sized banks, according to state media. ** Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.3 per cent, while Japan's Nikkei index gained 0.3 per cent.

The largest percentage of losses in the Shanghai index were Greattown Holdings Ltd, Liaoning Hongyang Energy Resource Invest Co Ltd and Shandong Huifa Foodstuff Co Ltd, all down by 10 per cent. ** In Hong Kong, the sub-index of the Hang Seng index tracking energy shares dipped 0.3 per cent, the IT sector fell 0.8 per cent, financial stocks lost 0.2 per cent, while property shares gained 0.9 per cent. ** As of 0400 GMT, China's A-shares were trading at a premium of 25.81 per cent over the Hong Kong-listed H-shares. ** As of midday, the Shanghai stock index is above its 50-day and 200-day moving average.