(Bloomberg) -- Chinese equities dropped as President Xi Jinping’s speech on the country’s four decades of reforms did little to lift sentiment.
The Shanghai Composite Index was down 1.1 percent as of 1:03 p.m. The tech-heavy ChiNext gauge declined 1 percent and Hong Kong’s Hang Seng Index dropped 0.9 percent, wiping out an early advance. Trading volume on the Shanghai gauge was 31 percent below its 30-day intraday average, according to data compiled by Bloomberg.
Xi’s speech is to mark China’s achievements in the past 40 years so “people shouldn’t expect any specific policies to be mentioned,” said Dai Ming, a Shanghai-based fund manager with Hengsheng Asset Management Co. “Investors should wait for the Central Economic Work Conference for a policy tone and measures from the two meetings early next year. It takes time for these policies to be rolled out and really have an impact.”
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The annual economic policy gathering will take place later this week, an event that has fueled speculation the government will loosen policy to aid growth. Tax cuts may be top of the reform agenda for next year, the China Daily reported Tuesday, citing an unidentified tax administration official.
“A-share investors are normally conservative before such meetings,” said Zhang Gang, a strategist with Central China Securities Co. in Shanghai. “It’s still uncertain what kind of policies will be announced. It remains to be seen how much the government will cut taxes. Also the slump in U.S. stocks overnight has affected sentiment,” he said.
Equity markets were lower across Asia in the wake of a sell-off in the U.S., where the S&P 500 Index closed at its lowest in 14 months. The MSCI Asia Pacific Index was down 0.8 percent Tuesday morning.
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“Hong Kong and China stocks should have slumped to follow the U.S. at open, but they didn’t, which was unusual,” said Castor Pang, head of research at Core Pacific-Yamaichi International HK. “That was because investors were expecting the Xi speech. But now that nothing special has been announced so far during the speech, investors are just doing what they should have done earlier and following the overnight rout in the U.S.”
Other index and stock moves:
- Gold miners, often bought as a safe haven, are among the top gainers on the CSI 300 Index; PRECIOUS: Gold Holds Advance as Investors ‘Wait Out This Storm’
- CSI 300 -1.3%, Shenzhen Composite -1.4%, HSCEI -1.1%
- Greentown China falls 11% in Hong Kong after plan to buy Aeon Life stake
- Yuan little changed after gaining as much as 0.14% against the U.S. dollar
- Yield on China’s 10-year government debt rises 1 basis point to 3.39%
