Share prices in mainland China were bearish Thursday as investors continued to be concerned over signs of liquidity tensions heading into the Lunar New Year holiday. Hong Kong stocks were also bearish by midday trading - mostly dragged down by losses in major tech shares.
Over the past two weeks, investors have expressed worries over the government possibly imposing tighter monetary policies. Liquidity conditions remained to be a key concern and investors are still playing it safe following the recent social media-driven chaos in the U.S. markets.
"There's persistent speculation that the Chinese authorities may want to tighten its policy," analysts at Mizuho Securities said.
Losses were fortunately stemmed by continually improving corporate earnings and easing market volatility. At midday break, the Shanghai Composite index fell by 1.02% at 3,481.45. Meanwhile, mainland China's CSI300 index fell by 0.81%.
Other mainland indexes also slightly fell. The Shenzhen index was down 1.8%, while Shanghai's tech board STAR 50 Index dropped by 2.68%. The tech startup board ChiNext Composite Index dropped by 1.23%.
The People's Bank of China - the country's central bank - previously said that it will likely not resort to a flood-like stimulus measure to support the country's economic recovery for 2021. The PBOC wrote Wednesday that it would endeavor to keep liquidity at reasonable rates throughout the coming quarters.
In Hong Kong, information technology-related stocks tumbled slightly. The Hang Seng sub-index tracking energy shares dropped by 0.1%, while the IT sector fell 3.4%.
In Thursday morning's trading, Alibaba's stock gained some traction after its fintech arm Ant Group reached a restructuring agreement with Chinese regulators. The agreement is expected to ease the company's regulatory woes and pave the road for Ant Group to become a financial holding company.
Poor stock performance in China and South Korea dragged the MSCI ex-Japan Asian-Pacific index, which fell by 1.2%. Other Asian midday highlights include a 1.1% drop in Japan's Nikkei, which broke its three-day winning streak.
