At closing bell, the benchmark Shanghai Composite Index declined 0.96%, or 33.13 points, to 3,419.95. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 2.13%, or 47.32 points, to 2,172.94. The blue-chip CSI300 index fell 2.15%, or 110.84 points, to 5,035.54.
Investors refrained from sectors with high valuations and shift towards cyclical players that benefit from an economic recovery. China's industrial output growth quickened in January-February, beating expectations, as the vast manufacturing sector started 2021 on a firm footing. Also, the neutral stance by the People's Bank of China bolstered expectations that a liquidity tightening trend was intact as the economy improves.
Market favourites, or so-called bubble stocks, were slammed again in rotation play. Battery maker Contemporary Amperex Technology fell 8.5% to 312.30 yuan in Shenzhen. Liquor distiller Kweichow Moutai fell 2.5% to 1,975.45 yuan in Shanghai, while China Tourism Group Duty Free dropped 3.8% to 297.80 yuan.
CURRENCY NEWS: China's yuan inched up against the dollar on Monday. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.501 per dollar, 165 pips or 0.25% weaker than the previous fix of 6.4845. In the spot market, onshore yuan CNY=CFXS opened at 6.4950 and was changing hands at 6.5032 at midday, 56 pips firmer than the previous late session close.
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