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China stocks end lower as policy tightening fears mount ahead of GDP data | Reuters

China stocks ended lower on Thursday, as worries about policy tightening mounted a day ahead of China’s first-quarter GDP data release.

** The blue-chip CSI300 index fell 0.6% to close at 4,948.97, down 16.5% from an all-time high hit on Feb. 18, while the Shanghai Composite Index lost 0.5% to 3,398.99.

** Analysts and traders said China’s policy tightening had begun and more upbeat economic data would reinforce Beijing’s tightening bias.

** China’s economy likely grew at a record pace of 19% in the first quarter, rebounding from a pandemic slump early last year, a Reuters poll showed.

** A series of upbeat data released recently added to signs of a solidifying recovery in the world’s second-largest economy.

** “The central bank’s monetary policy stance would remain balanced with a tightening bias,” said Li Han, a fund manager at Shanghai Jiaorui Investment.

** Li said he had been avoiding large-cap blue-chips and searching for opportunities in small- and mid-caps with solid growth and reasonable valuations.

** The banking sector took a hit, with the CSI300 banks index shedding as much as 1.9%.

** China is widening the scope of stress tests on its lenders by including all of its 4,024 banks this year, a central bank publication said on Wednesday, amid concerns over mounting debt levels of companies and financial strains in some sectors.

** Worries over China’s bond market also soured sentiment.

** The cost of insurance against a default in China’s dollar debt rose on Wednesday to its highest since October, on lingering concern over the effects of China Huarong Asset Management’s delay in reporting its results.

** Junk bonds would continue to be under pressure, which could weigh on the stock market and make stocks unable to better reflect the country’s economic recovery momentum, Hong Hao, head of research BOCOM International in Hong Kong, said in a note. (Reporting by Shanghai Newsroom; Editing by Rashmi Aich)

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