Shares start month on bearish note

Source: Xinhua | 2017-06-02

SHANGHAI shares started the month on a bearish note yesterday after a private business survey showed manufacturing activity unexpectedly contracted in May, fueling worries about the uncertainty over China’s economic recovery.

The Shanghai Composite Index lost 0.47 percent to 3,102.6 points.

The startup board ChiNext in Shenzhen slumped 2 percent to the lowest closing level in nearly 28 months.

Consumer sentiment was subdued after the Caixin China General Manufacturing Purchasing Managers’ Index fell for the third month to 49.6 in May, below the 50-point mark which demarcates growth and contraction.

May’s figure marked the first contraction in 11 months.

The fall in the Caixin index appears “consistent with the recent decline in the price of industrial metals” and is “consistent with our broader outlook on the Chinese economy,” Julian Evans-Pritchard, China Economist at Capital Economics, said in a research report.

The upbeat mood of the previous session — triggered by regulators’ share sale restrictions — also evaporated, as worries deepened about excessive government intervention.

Chen Xi, strategist at Dongguan Securities, said regulators’ tougher curbs on share sales, which were meant to stabilize the market, could backfire, as “capital would think twice before entering the market.”