Mainland China stock market closed down on Monday, 19 December 2016, as concern over relations between the world's two largest economies resurfaced after China seized an American underwater drone in the South China Sea over the weekend, prompting U.S. President-elect Donald Trump to accuse China of stealing it from international waters and label the incident an "unprecedented act." Meanwhile sentiments were also hit by dimming hopes for fresh monetary stimulus after Beijing vowed to contain asset bubbles next year by keeping monetary policy "prudent and neutral". Markets were cautious after China's top leaders vowed over the weekend to stem asset bubbles in 2017 and place greater importance on the prevention of financial risk. Meanwhile, China's bond market weakness persisted on Monday, deepening concerns over liquidity stress toward the year-end. The price of China's 10-year treasury futures for March delivery was down more than 1%. Most sectors lost ground, led by properties, after the sector was identified by China's top leaders as a focus of risk control in 2017. The Shanghai Composite Index fell 0.16% to 3,118.08, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.38% to 1,984.10. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, declined 0.89% to close at 1,980.41 points.
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