Stocks fall on liquidity concerns

BEIJING - Stocks fell on Wednesday due to worries over tightening liquidity in the domestic banking system and uncertainty over whether US President Donald Trump will be able to get his economic policies approved in a timely fashion.

The blue-chip CSI300 index fell 0.5 percent to 3,450.05 points, while the Shanghai Composite Index lost 0.5 percent to 3,245.22 points.

"Investors are taking a review of the global economic recovery, as Trump fails to put forward specific figures on his tax cut policies and infrastructure plans," said Linus Yip, strategist at First Shanghai Securities Ltd.

On Tuesday in the United States, both the S&P 500 and the Dow Jones Industrial Average booked their biggest one-day slide since Trump's election victory in November, on concerns about his ability to deliver promised corporate tax cuts.

Investors in China were also concerned about tightening liquidity in the banking system as the end of the quarter nears, said Haitong Securities analyst Zhang Qi.

Beijing-based independent stock investor and analyst Zhang Yanyun said the run-up in A-share prices was under the spotlight.

"The combined negative effects of quarter-end tight liquidity and the bearish performances of US markets yesterday pointed to the market dropping today, which may end the rising momentum of A shares in the short term," the analyst added.

Short-term interest rates in China surged on Tuesday as cash conditions tightened on worries the central bank's quarterly risk assessment at the end of this month would restrict lending in the interbank market.

Reuters - China Daily