After a week of relatively stable trade during China’s 19th Communist Party Congress, Chinese stocks took a tumble in early Monday trade.

The Shanghai Composite was down 0.73 percent at 12:47 p.m. HK/SIN after sliding 1.3 percent earlier in the session. The Shenzhen Composite and the ChiNext index, Shenzhen’s Nasdaq-style start-up board, were down 1.244 percent and 1.826 percent, respectively, after tumbling about 2 percent earlier in the day.

Experts gave different explanations for the fall in stock markets, with one pointing to the retreat in government bonds as a key factor.

“The bond market is crashing today,” said Hao Hong, head of research at Bocom International, adding that there were concerns about liquidity in the market.

Yields on China’s 10-year government bond had risen last week due to expectations that the country’s central bank would continue its deleveraging campaign. The 10-year’s yield stood at 3.89 percent at 11:34 a.m. HK/SIN — around the highest level in three years.

“China’s bond market entered a bear market despite China’s strong issuance of dollar sovereign bonds last week, as well as [the] People’s Bank of China’s gesture to ease liquidity concern,” Tommy Xie, an economist at OCBC Bank, said in a morning note.

The Chinese government had issued its first dollar-denominated bonds in more than a decade last week. Orders exceeding 11 times the deal-size had been placed, local news agency Xinhua reported.

Another market watcher said the downtrend in Chinese stocks could have come as a psychological pullback after the Shanghai Composite breached the 3,400 level last week.

Kenny Wen, a strategist at Sun Hung Kai Financial, said it was likely that retail investors were looking to lock in profits during the session. The slump in shares across sectors suggested a broad-based correction of sorts, Wen added.

Source: cnbc china
Chinese stocks take a dip