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Chinas BlueChip Index Lower on Policy Tightening Worries

Chinas bluechip index recouped earlier losses to end higher on Friday, helped by gains in infrastructure and securities stocks, though it posted weekly losses on investor concerns over policy tightening and lofty valuations.

The bluechip CSI300 index edged up 0.2 to 5,778.84, while the Shanghai Composite Index added 0.6to 3,696.17.

For the holidayshortened week, CSI eased 0.5, while SSEC firmed 1.1.

Leading the gains for the day, the CSI300 infrastructure index jumped 2.9, while the CSI SWS securities index climbed 2.7.

Among sectors with high valuations, the CSI300 consumer staples index retreated 2.6, snapping a fourweek gain, while the CSI300 healthcare index slumped 4.3.

Basically PBOC would start to drain liquidity sooner than the U.S. Fed, while there are already expectations of a rise in domestic interest rate, said Jin Jing, an analyst with Caitong Securities.

Investors could start to rebalance their allocations, shifting out of expensive stocks towards cyclical players with low valuations that would benefit from an economic recovery, Jin added.

With 100 billion yuan 15.45 billion worth of reverse repos maturing on Friday, Chinas central bank drained a net 80 billion yuan on the day.

The Peoples Bank of China PBOC has achieved its goal of maintaining the stability of money market interest rates around the Lunar New Year holiday with measured, targeted open market operations, the central bank publication Financial News said in a commentary published…

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