Chinese Stocks Are Dropping After a Fresh Signal from Beijing

China Stocks Drops As Shenzhen-Hong Kong Stock Connect Launches
NANJING, CHINA - DECEMBER 05: An investor obverses the screen at an exchange hall on the first day of Shenzhen-Hong Kong Stock Connect on December 5, 2016 in Nanjing, Jiangsu Province of China. China launches the Shenzhen-Hong Kong Stock Connect at booth Shenzhen Stock Exchange and Hong Kong Exchanges and Clearing Limited on Dec 5. The Shanghai Composite Index dropped 38.89 points, or 1.2% to 3,204.95 points. The Shenzhen Composite Index fell 128.3 points, or 1.18% to 10,784.33 points. (Photo by VCG/VCG via Getty Images)
VCG/VCG via Getty Images

China stocks slipped on Monday, led by blue-chips, as hopes for fresh monetary stimulus dimmed after Beijing vowed to contain asset bubbles next year by keeping monetary policy “prudent and neutral.”

The blue-chip CSI300 index fell 0.5%, to 3,328.98 points, while the Shanghai Composite Index lost 0.2% to 3,118.08 points.

Markets were cautious after China’s top leaders vowed over the weekend to stem asset bubbles in 2017 and place greater importance on the prevention of financial risk.

The policy signal from the economic planning meeting “disillusioned investors who had envisioned a further loosening in monetary policies. Now it’s clear that policies tend to tighten,” Wuhan-based Changjiang Securities said in a report.

Meanwhile, China’s bond market weakness persisted on Monday, deepening concerns over liquidity stress toward the year-end. The price of China’s 10-year treasury futures for March delivery was down more than 1%.

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Most sectors lost ground, led by properties, after the sector was identified by China’s top leaders as a focus of risk control in 2017.

China Vanke, whose share price had been boosted by a heated bidding war, slumped 6.1% to a four-month low on Monday, amid a regulatory clampdown on “barbaric” acquisitions by insurers. Vanke is down 22% since the end of November.

Bucking the broader trend, consumer and transport plays gained.

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