Chinese Stocks Decline Amidst Policy Meeting Outcomes

Chinese stocks experienced significant declines following a major economic policy meeting that reiterated previous commitments but lacked new initiatives to invigorate investors. Key indexes, including the Shanghai Composite and Hang Seng Index, showed notable drops. Investors remain hopeful as policy support prospects continue to evolve.

Chinese stocks took a nosedive on Friday, marking their steepest losses in three weeks. This downturn came after a major economic policy meeting concluded without introducing any novel measures, despite repeating promises to issue debt, lower interest rates, and bolster growth. At midday, the Shanghai Composite index fell 1.49% to 3,409.87 points, while the blue-chip CSI300 index dropped 1.82%. Meanwhile, Hong Kong's Hang Seng Index sank by 1.66%, settling at 20,057.69 points.

The declines, if sustained, will be the largest since late November. However, all three indexes are still poised for a weekly gain due to favorable policy support forecasts. The Central Economic Work Conference reaffirmed commitments to enhancing the budget deficit and maintaining growth, aligning with the Politburo's earlier announcement about shifting to a more relaxed monetary policy stance.

Analysts from ANZ remarked that both the Politburo and CEWC meetings seemed more like reiterations of past stimulus efforts rather than revealing new economic strategies. Various sectors including financials, consumer staples, real estate, and healthcare saw significant sell-offs in Shanghai, with developers like Longfor experiencing substantial losses. Investors, such as Huang Yan from Sanghai QiuYang Capital Co., suggest a natural correction post-meeting and anticipate support around the 3,400-point mark as markets brace for a likely U.S. rate cut in the coming days.

(With inputs from agencies.)