China stocks slip ahead of MSCI decision, liquidity concerns linger


Reuters

SHANGHAI, June 20 (Reuters) - China stocks slipped on
Tuesday amid lingering concerns over liquidity conditions, even
as investors awaited a decision by U.S. index provider MSCI on
whether to add mainland shares to its Emerging Markets Index
<.MSCIEF>.
    The blue-chip CSI300 index <.CSI300> fell 0.2 percent, to
3,546.49 points, while the Shanghai Composite Index <.SSEC> shed
0.2 percent to 3,140.01 points.
    The MSCI decision is due Tuesday afternoon in the United
States (4.30 am Wednesday Hong Kong time).
    Northbound trading under the mainland-Hong Kong stock
connect schemes has averaged a net inflow of 1.21 billion yuan
($177.15 million) per day in the last two weeks, more than the
938 million yuan in the first five months of the year, as
investors have built in high expectations of the inclusion.
    Many investors predict that the so-called A shares which
make up the majority of China's stock market will be included by
MSCI, which has rejected this on three previous occasions.
[nL1N1JA12M]
    But Yan Kaiwen, an analyst with China Fortune Securities,
said he believes inclusion of A-shares is "not that likely".
    Still, if MSCI again rejects inclusion, the impact on
Chinese markets "could be rather limited", he said.
    Generous money injections by the central bank are helping to
maintain some calm in China's financial markets, but market
interest rates are persistently high, reflecting worries that
liquidity conditions remain unusually tight. [nL8N1J60FM]
    Any signs of a potential credit crunch usually ripples
through Chinese financial markets as investors are wary of a
knock-on impact across broader economic activity.
    Most sectors lost ground, led by the defensive consumer
<.CSI300CS> and healthcare stocks <.CSI300HC>.

($1 = 6.8302 Chinese yuan renminbi)

 (Reporting by Luoyan Liu and John Ruwitch; Editing by Shri
Navaratnam)
 ((luoyan.liu@thomsonreuters.com ; Reuters Messaging:
luoyan.liu.thomsonreuters.com@reuters.net))

Keywords: CHINA STOCKS/CLOSE (URGENT)



This article appears in: Politics , World Markets , US Markets , Stocks


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