New | Fresh fall in Chinese stocks points to split in investor sentiment
Despite state support measures, Shanghai and Shenzhen shares resume their decline amid foreign investors' doubts over market prospects
A fresh drop in Chinese stocks after a brief respite on Monday revealed a deepening split in outlook between local and overseas investors, who seem unconvinced by Beijing's moves to steady the market.
H shares sank to a three-month low on Tuesday, giving up all their gains this year.
The H-share index fell 3.3 per cent to 11,827.3 points. With that, the index has fallen 16 per cent from its May 6 peak and is down 0.14 per cent in the year to date.
"A divergence in sentiment between onshore and offshore investors reflects their approach towards investing in Chinese markets," said Ben Kwong Man-bun, the head of research at KGI Asia.
Kwong said overseas investors in Hong Kong utilised market volatility to cash out of mainland Chinese stocks while retail investors in mainland China still held on to them in the belief that the government would do everything in its power to keep the market up.
The benchmark Shanghai Composite dropped 1.29 per cent on Tuesday, after rising 2.4 per cent on Monday following Beijing's weekend measures to revive sentiment with a 120 billion yuan stock rescue fund and liquidity support from the People's Bank of China.
