Chinese Stocks Extend Monthly Rout as Energy Producers Decline

Chinese stocks fell, extending last month’s rout, as traders unwound bullish bets and oil’s drop below $30 a barrel weighed on energy producers.

The Shanghai Composite Index slid 0.4 percent to 2,739.25 at the close, extending its slide this year to 23 percent. China Coal Energy Co. and PetroChina Co. led a gauge of energy companies to a record low. 

Developers gained after the central bank lowered mortgage down payments for first-home buyers. The Hang Seng China Enterprises Index tumbled 2.6 percent at 3:03 p.m., heading for its lowest close since March 2009.

Margin debt in China’s stock market shrunk to the lowest level since December 2014 on Monday, a sign of waning investor confidence after the Shanghai Composite’s biggest monthly tumble since 2008. 

The central bank said it will allow banks to cut the minimum required mortgage down payment to 20 percent from 25 percent for first-home purchases to the lowest level ever, as it steps up support for the property market. Mainland markets will be closed all next week for lunar new year holidays.

“The fear is that the stock market will continue to fall despite huge declines of late as the economy performs very poorly,” said Castor Pang, head of research at Core-Pacific Yamaichi Hong Kong.