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China shares slip on uncertainty over unlimited rule for Xi Jinping

Markets had initially welcomed the news after it was announced Sunday, with some analysts speculating it could make it easier for him to push through economic reforms

China stocks

China stocks (Photo: Reuters)

AP | PTI Hong Kong
Chinese stocks slipped today despite gains in most other world markets as uncertainty lingered over the removal of term limits for Chinese President Xi Jinping.

The Shanghai Composite sank 1.1 per cent to close at 3,292.07, while Hong Kong's benchmark Hang Seng Index lost 0.7 per cent to finish at 31,268.66.

Benchmarks elsewhere in the Asia-Pacific region were mixed, with Australia's S&P/ASX 200 and Japan's Nikkei 225 ending higher but South Korea's Kospi slightly lower.

European shares rose in early trading but futures pointed to a lower open on Wall Street, a day after the Standard & Poor's 500, Dow Jones industrial average and Nasdaq gained more than 1 per cent.

Investors are still mulling the implications of the decision by China's Communist Party to scrap presidential term limits, ensuring party chief Xi Jinping can remain head of state indefinitely and setting the stage for him to become the most powerful leader since Mao Zedong.

Markets had initially welcomed the news after it was announced Sunday, with some analysts speculating it could make it easier for him to push through economic reforms. But others wondered whether it would mean less incentive to make those changes.

"The removal of term limits was initially viewed as positive from a political continuity perspective but the market is a forever-discounting mechanism, so now investors get concerned about having all the control in one person's hands in perpetuity," said Stephen Innes, head of trading at OANDA.

Innes and other market watchers said the annual session of China's rubber stamp parliament, the National People's Congress, beginning Monday is also starting to make investors jittery and give them a reason to pull back. Xi is set to be named to a second five-year term and other top officials are to be appointed at the meeting.

Xi's top economic adviser, Liu He, is traveling to Washington to hold talks with American officials. China's foreign ministry gave no details about the six-day trip that began today and comes amid rising tensions over trade, technology and other issues.

Hong Kong's stock exchange operator is due to release earnings tomorrow. On the same day, a Chinese industry group is set to issue its latest monthly manufacturing survey.

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First Published: Feb 27 2018 | 5:25 PM IST

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