China stocks mixed following latest bond defaults

Yuan Luhang
Financial shares led the day's declines, with the insurance and banking sectors both tanking on asset quality concerns.
Yuan Luhang
China stocks mixed following latest bond defaults

China stocks closed mixed on Friday after more bond defaults rattled investors.

At close, China’s benchmark Shanghai Composite Index lost 0.86 percent to 3,310.10 points. The Shenzhen Component Index shed 0.27 percent to 13,754.55 points. The blue-chip CSI300 fell 1.05 percent to 4,856.85 points.

The tech-heavy ChiNext Composite Index increased by 0.23 percent to 2,706.81 points. The STAR 50 Index, which tracks the 50 biggest and most representative companies listed on the tech-heavy STAR Market for more than six months, rose 1.67 percent to 1,436.89 points.

Heavyweight financial shares led the day's declines, with insurance and banking share prices sliding 2 percent and 1.36 percent, respectively, on worries over asset quality following corporate bond defaults.

The National Association of Financial Market Institutional Investors, China’s interbank bond market regulator, said on Thursday that it is launching an investigation into state-owned Yongcheng Coal and Electricity Holding Group Co Ltd, which defaulted on a bond payment.

Recently, concerns over debt risks associated with Chinese state-owned firms are rising following a string of defaults.

Trading of Tsinghua Unigroup, also a state-owned firm established by Tsinghua University, was halted after a rating agency's debt warning sparked a sell-off on Thursday.

On October 23, Brilliance Auto, also known as Huachen Automotive Group, rattled China’s debt market by failing to repay 1 billion yuan (US$148.8 million) to its bondholders.

“Recent bond defaults have affected the whole financial market as investors’ sentiment was hurt,” Guosheng Securities said in a note.

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