China stocks tumbled in afternoon trade on Wednesday, despite surprisingly positive official economic data, as a recent post-rout, government-triggered rebound appeared to be running out of steam.
The CSI300 index of China’s largest listed companies tumbled more than 5 percent at one point, but eased some losses to end the day down 3.5 percent, at 3,966.76. The Shanghai Composite Index lost 3.0 percent, to 3,805.70 points.
The slide highlights the difficulty Beijing faces as it seeks to restore confidence in its stock market without signaling investors it is guaranteeing a zero-risk free for all, which would simply reinflate a rally that even regulators said had become too frothy.
“Sentiment is still weak,” said Du Changchun, analyst at Northeast Securities in Shanghai, adding that he believed most investors were selling off to cash in on a brief, if sharp, rally that pushed up indexes more than 10 percent last week.
The souring sentiment caused index futures to go negative across the board.
China CSI300 stock index futures for July fell more than 4 percent, while the futures tracking small cap CSI500 index saw most contracts near their maximum daily downside limit of 10 percent.
The fall comes as a fresh batch of companies resumed trading on Wednesday, leaving only about 25 percent of shares on trading halts, down from more than half during the rout.
Better-than-expected Chinese economic data on Wednesday failed to impress some investors. The economy grew an annual 7 percent in the second quarter.
“Investors liquidated their positions as the GDP data failed to impress, while domestic consumption showed no sign of improvement,” said Steven Leung, a director at UOB Kay Hian in Hong Kong.
Shenzhen’s start-up board ChiNext lost 4.6 percent. Infrastructure, transport and health care stocks also fell sharply.
But banking heavyweights rose, as well as energy giant PetroChina, fuelling speculation that government-backed investors are helping to stabilize the market.
“Either a thousand shares hit limit up, or a thousand shares stay limit down, or a thousand shares are suspended from trading,” is how one internet message described the recent status quo in China’s stock market.