November 9, 2018 / 7:41 AM / 11 days ago

China stocks fall for 5th straight session on cocktail of risks

* Both SSEC, CSI300 indexes drop 1.4 pct

* Financials under pressure after regulator asks to lend more

* Weaker car sales, producer inflation data also weigh on mkt

* Worries brew over new board disrupting a weak stock market

By Noah Sin

HONG KONG, Nov 9 (Reuters) - Chinese stocks fell nearly 1.5 percent on Friday, posting their fifth straight session of declines, as the market was weighed down by a mix of weak data, worries over rising pressure on financial companies and concerns of a new board in Shanghai disrupting the already weak A-share market. ** At the close, the Shanghai Composite index was down 1.4 percent at 2,598.87. The blue-chip Shanghai Shenzhen CSI 300 index was also lower by 1.4 percent. ** CSI 300's sub-index for the consumer staples sector fell 0.8 percent, the real estate index was down 1.2 percent and healthcare sub-index lost 0.8 percent. ** CSI 300's financial sector sub-index dropped 2.2 percent after the head of China's banking and insurance watchdog told banks on Thursday to allocate at least a third of their new loans to private companies, and asked them not to withdraw loans from companies struggling to repay. ** "Banks have undergone deleveraging for quite some time," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu. "The market is worried that banks' non-performing loan ratios will go up if, on top of that, they need to lend more to businesses that are facing difficulties." ** Some investors are staying on the sidelines, awaiting the next turn in the ongoing trade conflict between Beijing and Washington, said Zhang Gang, a Shanghai-based analyst at Central Securities. "There is still a lot of uncertainty, the impact of the tariffs has not been fully realised yet." ** While October trade figures, made public on Thursday, came in above expectation, economists attributed the uptick to front-loading, as businesses raced to trade more ahead of additional U.S. tariffs scheduled for the turn of the year. ** Two other sets of economic data led the market lower in the afternoon session. Producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity. Meanwhile, car sales in China were also down for a fourth consecutive month, having dropped more than 11 percent in October. ** "The direction of the market will ultimately depend on the result of trade talks between China and the U.S., especially at the G20 meeting," Zhang added, referring to the planned meeting between Chinese President Xi Jinping and U.S. President Donald Trump at the summit in Argentina later this month. ** Investors have been worried that the launch of a new board for tech companies this week, announced by Chinese President Xi Jinping on Monday, will disrupt the valuation structure of the market, said Cao. ** These concerns mounted after Fang Xinghai, deputy head of the securities regulator, said on Wednesday the regulator would quickly implement Xi's plan for a new board, Cao added. [here) ** "It could be difficult to push this through when the market is not doing well, when confidence is lacking," said Zhang Qi, an analyst with Haitong Securities in Shanghai. "But to be fair, the authorities didn't say they will do it immediately. I think they will take it step-by-step." ** The smaller Shenzhen index ended down 0.4 percent and the start-up board ChiNext Composite index was weaker by 0.5 percent. ** So far this week, the Shanghai stock index and the CSI300 have both fallen 1.4 percent. The two indices were down for every trading day this week. ** As of 07:00 GMT, China's A-shares were trading at a premium of 18.1 percent over the Hong Kong-listed H-shares.

Reporting by Noah Sin; Editing by Subhranshu Sahu

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