China share markets resumed their slide on Wednesday morning, as investors, unconvinced that fresh easing in the property sector could revive the economy, took advantage of Tuesday’s 2 per cent rebound to reduce their exposure.
Hong Kong shares tumbled, led by the energy sector amid renewed declines in oil prices, and insurance heavyweights after Beijing imposed limits on purchases of insurance products in the city by mainlanders using bank cards.
China’s blue-chip CSI300 index fell 1.1 per cent to 2,929.71 points by the lunch break, while the Shanghai Composite Index lost 1.2 per cent to 2,717.50 points.
In Hong Kong, the Hang Seng index dropped 2.5 per cent to 18,963.40 points, while the Hong Kong China Enterprises Index lost 2.8 per cent to 7,834.17.
Property was the only sector on the mainland that ended morning trading in positive territory, aided by fresh government support measures.
Late on Tuesday, China had said it would reduce the minimum down payment required for first- and second-time home buyers in most cities, a move aimed at clearing a housing glut.
But some analysts say continued easing to prop up China’s frothy property prices would do little to spur property investment, and would put RMB, the Chinese currency, under even more depreciatory pressure.
“The cut in property down payment... will do little to turn the tide on China’s secular property cycle,’’ wrote Hong Hao, Managing Director, Research at BOCOM International.
“Eventually, the property bubble will cave in despite policy interventions, likely becoming palpable in 2017, if history is a guide.’’
Hong expected China to tighten capital controls to stem outflows, while stabilising the RMB and easing its monetary stance. Nevertheless, Hong said “forex reserve will be spent, as China defends its currency.’’
In its latest move to curb outflows, China was putting a limit on purchases of insurance products in Hong Kong using the country’s ubiquitous UnionPay credit and debit cards, two sources told Reuters on Wednesday.
The news hit Hong Kong-listed insurers hard, with index heavyweight AIA slumping 4.5 per cent, Ping An Insurance Group of China tumbling 3.8 per cent and China Life down 3.8 per cent.
The Hong Kong market was also dragged lower by oil heavyweights such as Sinopec, PetroChina and CNOOC. An index tracking energy shares fell 3.6 per cent.