CSI 300 Index

The most recent inflation readings suggest the GDP deflator, a broader measure of economy-wide prices, will likely extend its drop for the seventh straight quarter, according to Bloomberg Economics.

The CSI 300 Index closed down 2.9% on Thursday, its steepest drop on a year’s first day of trading since 2016. The Hang Seng China Enterprises Index slid as much as 3.1%.

Trip.com Group and Haidilao International Holding rose more than 5% each, helping to push a gauge of Hong Kong-listed Chinese stocks up by as much as 2.3%.

Retail investors are cashing out from China’s exchange-traded funds, risking further market volatility if Beijing fails to boost sentiment, according to analysts.

The Hang Seng China gauge has now lost 17% since its October peak. The CSI 300 is down more than 8%.

The group of 10 ETFs has gotten around 30 billion yuan ($5.57 billion) of inflows since trading started this month, sending their combined size to 52 billion yuan.

The CSI 300 Index ended the day 1.1% lower, taking its declines from an Oct. 8 high to about 11%.

Any reaction on Monday will be focused on Hong Kong as mainland financial markets are closed until Wednesday due to holidays.

Some investors say Chinese equities’ ultra-cheap valuations offer good risk-reward opportunity.

The latest move is part of the government’s most forceful attempt yet to prop up the nation’s US$8.6 trillion stock market.