AUSTRALIA’S biggest stock market index has been hit by a record number of new investment loans, with an average value of $1.9 billion.
The S&P/ASX 200 index closed down 1.5 per cent at 9,879.93, following a sell-off that started on Thursday and saw the benchmark’s market cap fall more than 25 per cent.
It closed down 6.9 per cent on Friday, after touching a two-year low on Thursday, but still stood at 6,869.56.
Shares of Chinese state-owned enterprises rose 3 per cent and Chinese real estate companies gained 3 per “per cent” on Friday.
“We have to be patient,” S&p China analyst Paul Hickey said.
In an interview with Reuters, Mr Hickey noted the Chinese government’s decision to freeze some capital controls and slow capital outflows, as well as concerns about the government’s plans to curb the influence of its largest shareholder, China National Petroleum Corp. (CNPC).
“I think the markets have been waiting for the Chinese authorities to take action,” Mr Hiccys said.
“They need to start to move ahead.”
The China National Industrial Investment Corporation (CNIC) is a state-run investment company with a global portfolio of assets ranging from steel to infrastructure.
Mr Hickey pointed to the fact that the market was down about 2 per cent in early trading on Friday compared to a week ago, when the index was up almost 10 per cent, when it was down almost 30 per cent from the end of last year.
While the S&P/ASEX 200 closed down about 11 per cent for the week, the market fell more than 20 per cent over the previous three months.
Ltd has reported losses for three quarters in a row and its shares have lost more than 80 per cent of their value in the last six years.
Analysts say the market will need to see more data from the Chinese National Bureau of Statistics (NBS) on the economy to determine if the slowdown has slowed.
Some analysts believe that Chinese growth is slowing, with China’s manufacturing output shrinking at a faster rate than expected, and a decline in the number of workers.
However, it is unclear how much impact the slowdown is having on the market.
Investors in the S &Ltd have poured money into the market since the start of the year, when a $100 billion market cap led to an oversupply of Chinese stocks, triggering a selloff that caused the S/TSX Composite Index to fall more nearly 1 per cent this year.
A total of $11.4 trillion in loans are on the books for investors, including $2.6 trillion in new debt.
The S/ETF was last down about 3 per the SIPO and S&am Group has its share of credit markets in China.