China stocks in morning freefall as pension fund rules fail to inspire
By Pete Sweeney and Samuel Shen
SHANGHAI (Reuters) - China major stock indexes collapsed on Monday morning, with traders saying market disappointment over the lack of a liquidity move by the central bank during the weekend triggered a fresh selloff.
Main indexes tumbled more than 11 percent last week as investors began to worry that the central government was backing off on plans to prop up the market.
The worry was aggravated by a strong injection of short-term liquidity into the interbank market that many read as a substitute for deeper easing.
The CSI300 index <.CSI300> fell 6.7 percent to 3,349.20 points at 0149 GMT (12.49 a.m. BST), while the Shanghai Composite Index <.SSEC> lost 6.6 percent to 3,277.94 points, its lowest level since March.
China CSI300 stock index futures for September fell 7.1 percent, to 3,233.6, or 109.37 points below the current value of the underlying index, and all other futures contracts were also negative.
"The market is in a downtrend. There's no good news, stocks are still expensive, and there's no fresh money coming in," said Qi Yifeng, analyst at consultancy CEBM.
"With no RRR (reserve requirement) cut over the weekend, the market will directly head south."
The Hang Seng index <.HSI> dropped 3.7 percent, to 21,586.98 points.
The Hong Kong China Enterprises Index <.HSCE> lost 4.5 percent, to 9,732.62.
Investors failed to take inspiration from the formalisation of rules allowing pension funds to invest in the stock market over the weekend.
"The pension fund news will not help, because the money is limited, you don't know when the money will come in, and the purchase is not sustainable," said Qi.
(Editing by Richard Borsuk)
