China stocks flat despite yuan weakness, property curbs
China's main stock indexes were little changed on Friday morning, pointing to flat trading for the week, as a month-long, 10 percent market rebound loses momentum.
Stock investors appear unfazed by yuan's resumed weakness against the dollar this week -- the Chinese currency is on track to fall against the greenback for five straight days as Chinese leaders reiterated that China opposes competitive currency depreciation.
There was also little reaction to the widely expected move by Shanghai and Shenzhen to curb speculation in the cities' red-hot property market. The real estate sector actually rose on Friday morning after the restriction measures were released.
The blue-chip CSI300 index rose 0.2 percent to 3,188.32 points by lunch time, while the Shanghai Composite Index gained 0.1percent, to 2,963.29 points.
Both indexes are set to end the week roughly flat, having bounced over 10 percent off lows hit on February 29.
Following the solid rebound, "investors start to diverge over the market's direction. Optimists say that market has bottomed out, but pessimists regard it as merely a technical bounce in a bearish trend, as China's economy remains weak," said David Dai, Shanghai-based investor director at Nanhai Fund Management Co.
Reflecting that divergence, latest data shows that Chinese share investors increased their leveraged bets for a fifth consecutive session, but at the same time, the trend of investors parking more money in money market funds, perceived safe haven assets, also continues.
"Investors are waiting for new events that can drive the market," Dai said.
He noted that fears of sharp yuan devaluation were no longer the focal point for stock investors, following Beijing's moves earlier this year to stabilise that market.
Indeed, although the yuan is set to post its biggest weekly fall against the dollar in 2-1/2 months, there are few signs of panic selling in equity markets.
China opposes competitive currency depreciation, central bank governor Zhou Xiaochuan told a forum on Thursday, echoing Premier Li Keqiang's view, who was also present at the meeting. Sector performance was mixed.
The property sector gained, even as Shanghai tightened mortgage down payment requirements for second home purchases, among other measures to cool its overheating property market.
Shenzhen also published rules to discourage speculative home purchases in the city, state media reported on Friday.
Analysts said that these measures targeting major cities have limited impact on the national property market, and the impact has already been priced in.