Chinese stocks extended their decline on Friday following key political meetings, with tech and rare earth sectors leading the drop as investors adjusted positions after weeks of speculation-driven gains, a market analyst said.
Chinese stocks closed lower on Friday, with the benchmark Shanghai Composite Index down 0.81 percent to 3,954.79 points.
The Shenzhen Component Index closed 1.14 percent lower at 13,378.21 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 2.31 percent to close at 3,187.53 points Friday.
Market analyst Timothy Pope highlighted the trends behind the numbers in his recap of China's stock market performance.
"The Shanghai Composite fell 0.8 percent today, continuing yesterday's post-talks slide. It's interesting, you can see on the charts from yesterday exactly when we got news of those talks wrapping up, because that was when the markets started to go down. Ahead of the talks, we'd seen the index close above 4,000 points for the first time in a decade, but it's going to end the week and the month a little bit below that. Although we are still looking at a 2.5-percent gain for the whole month of October," he said.
"I guess it's probably worth pointing out as well that the falls don't mean the market is unhappy with the outcome of the talks. Certainly, there were a few surprises, but that's probably a good thing. And because we saw rare earths and semiconductors included in the discussions, and those were the things that were really rising over the last couple of weeks. Those were where we saw the bulk of the falls today. Chip company Cambricon was down 3.3 percent, and the Chinese tech sector as a whole sank by about 2.5 percent. We also had today the latest factory data showing contraction for the seventh month in a row and of particular note in that data was a drop in new export orders," he said.
"Indeed, now that we've got the big policy and trade events of the year behind us, hopefully, and really until the 'Two Sessions' and the release of the next [15th] Five-Year Plan early next year, we could be in for a quieter period where investors can focus more on fundamentals. But certainly, with liquidity and investor interest still high, we can also expect to see the Composite index at least push up against that 4,000 level again fairly soon," he said.
Chinese stock market extends decline Friday as investors adjust: analyst
