Chinese Stocks Fall as Oil Decline Weighs on Energy Companies

  • China’s currency reserves edge below $3 trillion in January
  • Monday crude slump sees oil companies among biggest losers

JPMorgan's Glassman: U.S. Sees Potential of China Growth

Chinese equities dropped, with weaker oil prices weighing on energy companies, and as investors fretted over data on the nation’s foreign-currency reserves to help gauge the outlook for the yuan.

The Shanghai Composite Index fell 0.1 percent to 3,153.09 at the close. Hong Kong’s Hang Seng Index declined 0.1 percent to 23,331.57, with China Petroleum & Chemical Corp. and CNOOC Ltd. among the biggest decliners. The Hang Seng China Enterprises Index added 0.1 percent, as insurers extended their rally in the afternoon.

Oil posted its biggest daily loss in more than two weeks on Monday, with U.S. crude stockpiles forecast to have grown by 2.5 million barrels last week, according to a Bloomberg survey of energy analysts. China’s currency reserves decreased $12.3 billion to $2.998 trillion last month, the central bank said after the stock market close. There was much focus on whether the stockpile will drop below the psychologically relevant $3 trillion level, with the country continuing to manage the yuan amid its bid to stem capital outflows.

"Many people view the 3-trillion-dollar level as a threshold," said Kenny Wen, strategist at Sun Hung Kai Financial Ltd. in Hong Kong, before the release of the foreign reserves data. "The markets have been trading within a very narrow range and they may remain so, until there are clearer clues about the outlook for the yuan and there are more clarifications on U.S. President Donald Trump’s policies."

A gauge of 90-day volatility on the Hang Seng Index fell to the lowest level since November 2014 on Tuesday, while 90-day volatility on the Shanghai Composite Index was close to the lowest since 1992. Average daily turnover for Hong Kong’s securities market was HK$57.2 billion ($7.4 billion) in January, down from HK$82.2 billion a year earlier, the Hong Kong stock exchange said in a statement on its website Monday.

Chinese insurers extended their rally in Hong Kong, with China Life Insurance Co. rising 2.2 percent, after they jumped on Monday amid speculation domestic pension funds are about to enter the stock market. Gains were also stoked by the increase in China’s 10-year sovereign bond yield after the central bank raised the interest rates it charges in open-market operations and on funds lent via its Standing Lending Facility.

  • Chinese property developers in Hong Kong rose, led by Country Garden Holdings Co., as the sector was upgraded by Morgan Stanley due to low land supply
  • Guangdong Enpack Packaging Co., Shenzhen Kangtai Biological Products Co. and Zhejiang Tuna Environmental Science & Technology Co. climbed more than 40% on their trading debuts
  • China Telecom Corp., China Unicom (Hong Kong) Ltd. rose more than 1% in Hong Kong after both were upgraded to buy from neutral at UBS
  • NewOcean Energy Holdings Ltd. surged as much as 79% in Hong Kong, the steepest intraday advance on record
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