China stocks post weekly drop on policy tightening worries | Reuters

China shares posted a weekly loss on Friday as a conservative 2021 economic growth target sparked fears Beijing could tighten policy to rein in lofty valuations, though infrastructure firms helped benchmark stock indexes eke out gains for the day.

** The blue-chip CSI300 index rose 0.4% to 5,146.38, while the Shanghai Composite Index added 0.5%to 3,453.08.

** The CSI300 infrastructure jumped 3.2%, thanks in part to low valuations after underperforming the market for a long time.

** Helping sentiment further, a retreat in U.S. bond yields overnight eased global concerns about rising inflation.

** “Risk appetite could pick up again, as the U.S. yield rally has lost momentum for now,” Yan Kaiwen, an analyst with China Fortune Securities, noted in a report.

** For the week, CSI300 lost 2.2% and SSEC shed 1.4%.

** Last Friday, China set a modest annual economic growth target, at above 6%, which was significantly below the consensus of analysts, who had expected growth could beat 8% this year.

** Chinese Premier Li Keqiang defended the government’s target for more than 6% economic growth this year, saying it was “not low”, and policies would not be dramatically loosened to chase higher growth.

** A lower economic growth target gives China room to rein in frothiness in the market even as inflation fears grow, said analysts.

** Once high-flying sectors with lofty valuations had been the hardest hit in recent weeks.

** For the week, the CSI300 consumer staples index dropped 3.2%, while the CSI300 healthcare index slumped 4%, extending a steep correction since mid-February.

** Investors also watched developments around Sino-U.S. relations.

** The United States on Thursday condemned Chinese moves to change Hong Kong’s electoral system and forecast “difficult” talks with Beijing’s top diplomats next week.

** Shares of Huawei suppliers retreated as the U.S. administration added new limits on these companies. (Reporting by Luoyan Liu and Andrew Galbraith; Editing by Subhranshu Sahu)

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