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China stocks end lower on U.S. ban, bond default jitters; post weekly loss

SHANGHAI, Nov 13 (Reuters) - China stocks closed lower on Friday to post a weekly loss, after Trump administration decided to ban U.S. investments in firms linked to the Chinese military, while a series of corporate bond defaults also hurt sentiment.

** The blue-chip CSI300 index ended 1.1% lower at 4,856.85, while the Shanghai Composite Index eased 0.9% to 3,310.10.

** For the week, CSI300 slipped 0.6%, while SSEC shed 0.1%.

** CSI300 briefly hit a more than five-year high on Monday, following Biden’s presidential election victory, but pared gains later in the week on soft inflation and lending data and as techs took a hit from Beijing’s latest draft anti-trust regulation.

** U.S. President Donald Trump’s administration unveiled an executive order prohibiting U.S. investments in Chinese firms that Washington says are owned or controlled by the Chinese military, sending their shares lower.

** Heavyweight banking shares led the decline on Friday, with the CSI300 banks index ending down 1.9% on worries over asset quality following corporate bond defaults.

** A Chinese miner that defaulted this week held an emergency creditors’ meeting on Friday to address potentially “huge credit risks”, as a series of defaults by top-rated state-owned enterprises (SOEs) sent shockwaves through China’s corporate bond market.

** Investors have traditionally seen bonds issued by state-owned firms as less risky due to their perceived government backing. But the recent delinquencies triggered a selloff in debt issued by state firms in impoverished provinces, raising fears of a brewing credit crisis.

** “There could be more bond defaults in the future, given a backdrop of China’s economic transformation to high quality growth which causes ‘survival of the fittest’”, said Fu Yanping, analyst with China Galaxy Securities.

** However, Fu does not expect a systemic financial risk. (Reporting by Luoyan Liu and Andrew Galbraith; editing by Uttaresh.V)

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