(Bloomberg) -- Chinese stocks fell as investors were seen reducing risk before the Ministry of Finance holds a policy briefing on Saturday, where it may add fresh fiscal stimulus.
The CSI 300 Index dropped 1.6%, extending this week’s losses to about 2.1%. Hong Kong’s market is shut Friday for a holiday.
Equities have been whipsawed this week as traders digested a set of lackluster holiday-spending data, assessed messages from the state economic planner’s latest briefing, and pinned their optimism on Saturday’s press conference. There is plenty of concern the share rally that began in late September will unwind further if measures announced at the MOF briefing fall short of market expectations.
Friday’s decline “is generally because of risk-off sentiment going into the weekend as people remain cautious due to policy uncertainty,” said Billy Leung, an investment strategist at Global X Management.
Investors and analysts are expecting China to deploy as much as 2 trillion yuan ($283 billion) in fresh fiscal stimulus, according to a majority of 23 market participants surveyed by Bloomberg. They forecast China will sell more government debt to expand public spending through the end of next year, with special bonds being the most likely option.
“The magnitude of the stimulus does matter because market expectation has run high,” Vivian Lin Thurston, a fund manager at William Blair, said in a Bloomberg Television Interview. “More importantly, we are looking for how they are going to implement that stimulus given they have a lot unused fiscal policy earlier.”
The CSI 300 Index has climbed more than 20% from its close on Sept. 23, the day before China’s central bank announced a broad package of monetary stimulus measures. That compares with a gain of just 1% for the MSCI All Country World Index.
The benchmark of onshore Chinese shares jumped 5.9% on Tuesday — capping a 10th straight session of gains as trading resumed after the Golden Week holiday. It then plunged more than 7% on Wednesday, and closed higher again on Thursday.
“There is still limited clarity on the magnitude, nature and time frame of fiscal measures to come,” said Eli Lee, chief investment strategist at Bank of Singapore. “Beijing could be more inclined toward enabling a slower and more sustained bull market, rather than a short-lived bubble.”
--With assistance from Winnie Hsu, Abhishek Vishnoi, David Ingles and Yvonne Man.
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