Weakness in small capitalised shares drag China stocks lower

Shanghai: China's stocks slipped on Wednesday, with continued strength in materials shares offset by weakness in small-cap firms.
The blue-chip CSI300 index fell 0.3 per cent, to 3,760.85, while the Shanghai Composite Index lost 0.2 per cent to 3,285.06 points.
The tech-heavy start-up board index ChiNext fell 0.9 per cent.
The index was down 4.5 per cent in July, far underperforming the broader market, amid worries over growth prospects at tech firms.
Reaction was muted to blockbuster earnings from Apple that boosted tech shares in other markets, with an index tracking major tech, media and telecom firms closing down 1.1 per cent.
Halfway through the latest corporate earnings reporting season, investors continued to favour main board firms, while shunning small-caps with unclear growth prospects.
According to first-half earnings forecasts and reports already published by listed companies, main board firms recorded strong profit growth, while gains at start-up firms slackened from the first quarter and were seen declining, Guosen Securities wrote in a report.
"It's still too early to forecast the end of the bull run in cyclicals, in particular material firms, although there could be strong resistance around the 3,300 level" for the SSEC, said Yan Kaiwen, an analyst with China Fortune Securities. Sector performance was mixed. Banking and material firms led the advance, while real estate slipped 1.4 per cent and infrastructure stocks fell 1.5 per cent.
The material sector rose 0.9 per cent to nearly two-year highs. It has surged nearly 30 per cent this year as the building frenzy in China spurs demand and prices for products from cement to steel.
Fangda Carbon New Material leapt by the 10 per cent trade limit to a record high. The firm, which forecast a more than 2,600 per cent increase in first-half profit due to rising product prices, has rocketed 267 per cent this year.