Stockbrokers speak on the phone in front of monitors displaying share prices at a securities brokerage in Hong Kong, China (Photographer: Billy H.C. Kwok/Bloomberg)

China Stocks in Line for Lowest Close Since 2014 After U.S. Rout

Dec 25 2018, 4:24 AMDec 25 2018, 5:56 AMDecember 25 2018, 4:24 AMDecember 25 2018, 5:56 AM

(Bloomberg) -- China stocks were poised for the lowest close since 2014 as investor concern over a rout in the U.S. outweighed hopes the government will do more to support the economy.

The Shanghai Composite Index dropped 2.1 percent as of 1:15 p.m. in Shanghai. Oil companies fell as crude slumped, while Sanan Optoelectronics Co. retreated after its price target was slashed. Hong Kong’s stock market was closed for the holiday.

Stocks in the U.S. slid on Christmas Eve, sending equities in Japan tumbling on Tuesday morning. That was enough for investors in China to disregard a pledge by Chinese policy makers to do more to support a private sector hit by the slowing economy. The State Council said in a statement on Monday that the central bank will improve policies on targeted reserve-requirement ratio cuts and inclusive finance to further support private companies.

China’s stock benchmark is down 25 percent this year, in line for the worst performance in a decade, as a trade dispute with the U.S. escalated.

The CSI 300 Index fell 1.9 percent on Tuesday, while the small-cap ChiNext Index dropped 2.5 percent. China’s sovereign bonds advanced, with the yield on 10-year government notes falling 3 basis points to 3.32 percent.

China Petroleum & Chemical Corp. and PetroChina Co. each lost more than 2.2 percent as crude dropped to the lowest level in a year and a half.

Sanan Optoelectronics tumbled 4.5 percent as China International Capital Corp. cut its price target by 40 percent and lowered its rating to hold. The brokerage said the LED chip market entered recession in the third quarter and would likely worsen in 2019.