Chinese Equity Woes Deepen as CSI 300 Falls to Lowest Since 2016

(Bloomberg) -- Chinese stocks extended declines Friday, with the CSI 300 Index falling for a sixth day and closing at its lowest since March 2016.

The CSI 300 gauge fell 1.2 percent, taking its six-day loss to 5.9 percent. Most other markets across Asia also retreated in the wake of a sell-off in the U.S., which faces the threat of a government shutdown. Hong Kong rebounded from an early loss though, helped by a 4.5 percent rally in heavyweight Tencent Holdings Ltd.

The declines come toward the end of a year in which investors in Chinese equities have found few bright spots, with nearly $3 trillion wiped off the value of the country's stock market since the end of January. Hopes of a resolution in the trade dispute with the U.S. and steps by Chinese authorities to provide more liquidity support and loosen curbs in sectors such as property have failed to lift stocks.

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Developers fell further Friday -- China Fortune Land Development Co. and Risesun Real Estate Development Co. were among the worst performers on the CSI 300, retreating more than 4 percent. A sell-off in health-care stocks extended amid concern over government policy on drug pricing. Jiangsu Hengrui Medicine Co. was one of the bigger losers, sliding 5.4 percent for a weekly loss of 15 percent. There wasn't much sanctuary in small caps either, with the ChiNext gauge falling 0.6 percent.

After failing to predict the worst year for China stocks in a decade, strategists are cautiously optimistic for 2019. The Shanghai gauge will end next year at around 2,950, according to the median estimate of 22 analysts and fund managers surveyed by Bloomberg.

In Hong Kong, Tencent posted its biggest gain since Nov. 15 following reports that Chinese regulators have resumed approving games, indicating a possible end to a months-long hiatus that's chilled the world's biggest gaming industry.

To contact Bloomberg News staff for this story: Ken Wang in Beijing at ywang1690@bloomberg.net;Will Davies in Hong Kong at wdavies13@bloomberg.net

To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Ron Harui, Will Davies

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With assistance from Bloomberg