Liquidity woes weigh on China stocks

Mainland China stock market declined for third straight session on Tuesday, 20 December 2016, touching a six-week low after government authorities tightened regulations to prevent financial risks and asset bubbles. The central bank said on late Monday it would tighten supervision of shadow banking businesses by including off-balance sheet wealth management products, widely viewed as a source of financial risk, into its risk-assessment framework next year. The move represents another step by Beijing to rein in speculative credit growth in an effort to prevent asset price bubbles. Adding to pressure was a turbulent bond market, with China's 10-year treasury futures for March delivery plumbing a record intraday low, raising persistent concerns over liquidity stress. Most sectors lost ground, led by banks and properties. Gains were only seen in infrastructure shares. The Shanghai Composite Index fell 0.49% to 3,102.88, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.14% to 1,981.32. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, added 0.1% to close at 1,982.30 points.

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