After strong gain, Chinese stocks slide

Chinese stocks slid yesterday, a day after Shanghai's best rally in more than two years. The Shanghai Composite Index closed down 1.17 percent at 2744.07 points and the Shenzhen Component Index slipped 2.02 percent to end at 8499.22 points.

Medical, automotive electronics and network shares all fell sharply. But there were gains for the cement, natural gas, steel, petroleum and petrochemical sectors.

The falls came after the central bank met lenders on Monday to encourage currency stability. The People’s Bank of China urged major banks to prevent any “herd behavior” and momentum-chasing moves in the foreign-exchange market, which marked the latest move by China to promote stability in the yuan.

“The news about the PBOC’s meeting with banks helped sentiment,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd.

However, “you can’t chase a rally in a bear market, we are far from the bottom yet,” said China Vision Capital president Sun Jianbo. “The macro uncertainties haven’t changed at all, despite stimulus measures announced by the government. The fundamental reason for this bear market is a weakening Chinese economy.”