(Bloomberg) — Chinese stocks slid on Wednesday, with liquor makers leading declines in consumer staples following a recent rally on the back of price hikes.
The benchmark CSI 300 Index dropped as much as 1.3%, leading losses in Asia amid thin year-end liquidity. A sub-index of consumer staples fell by the most since mid-October as baijiu distillers Kweichow Moutai Co. and Wuliangye Yibin Co. plunged more than 4% each.
“The drop is mostly contributed by some blue chips, in particular the baijiu names. It’s likely that some funds want to cash out before the year-end after the recent rebound,” said Zhang Gang, a strategist at Central China Securities Co. “Also, China Mobile Ltd. is listing in the A-share market soon and there might be some worries in the market about liquidity tightness.”
READ: China Mobile Boosts Share Sale to World’s Second-Biggest in 2021
China’s central bank added more cash to the financial system in the past two days to ease a seasonal liquidity crunch. Still, Wednesday’s losses mean the CSI 300 is now down more than 6% so far in 2021, versus a decline of about 4% in the MSCI Asia Pacific Index.
Alcohol maker Luzhou Laojiao Co. slumped as much as 6.4%. The firm hiked prices for its 60-year-old wine, according to a China Securities Journal article.
It’s the typical “sell on good news” as speculation about price hikes has been driving the sector of late, said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd.
Meanwhile, Hong Kong’s benchmark Hang Seng Index dropped almost 1% following a five-day winning streak. The Hang Seng Tech Index lost as much as 1.9%, showing that investor sentiment toward the battered sector remains weak heading into the year-end.
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