Sat, Jan 04, 2014 - Page 15 News List

China, Hong Kong shares drop

DIMINISHING:China’s services and manufacturing PMI indicate the economy lacks direction, causing concern among investors, an equity sales expert said

Reuters, HONG KONG

Hong Kong and Shanghai shares broke below key technical support levels yesterday, dragged down by Chinese financial and energy sectors, after another government survey showed signs the world’s second-largest economy was losing momentum.

Analysts said weakness in global markets, sparked by a bout of risk aversion, further dampened sentiment as investors remained concerned about slower economic growth in China.

Growth in China’s services sector fell to a four-month low last month as business expectations dropped, a survey showed, adding to evidence that China’s economy lost steam into the close of last year.

Yesterday, the Shanghai Composite Index ended down 1.2 percent and fell below the 2,100 support level to 2,083.13 points.

The CSI300 index of the leading Shanghai and Shenzhen A-share listings dropped 1.3 percent to its five-day low.

For the week, the indexes fell 0.9 percent and 0.6 percent respectively.

Chinese financial and cyclical stocks were leading losers.

China Life Insurance declined 2.6 percent to its lowest in two weeks, while the Shanghai listing of China’s biggest oil refiner Sinopec dropped 1.8 percent to a two-month low.

Growth in China’s services sector slipped to a four-month low last month as business expectations dropped, a survey showed, adding to evidence China’s economy lost steam late last year.

Earlier this week, two manufacturing surveys showed factory growth slowed last month.

On the week, they are now down 1.3 percent and 2.6 percent respectively.

In China markets, the CSI300 dropped 1.5 percent, while the Shanghai Composite Index was down 1.4 percent and fell below the 2,100 support level to 2,080.59 points. They have fallen 0.7 percent and 1 percent so far this week.

“Both service and manufacturing PMI [Purchasing Managers’ Index] are indicating that China’s economy is not doing particularly well and still lacking any direction,” said Jackson Wong, vice-president for Tanrich Securities’ equity sales in Hong Kong.

“A lot of investors are overly worried about China’s economy health and debt problems,” Wong said, adding that most investors would wait on the sidelines and the Hong Kong market may test the 27,500 support level in the short-term.

Leading losses were Chinese financial and cyclical stocks.

Ping An Insurance was down 2.4 percent in Shanghai while China Life declined 2.7 percent.

In Hong Kong, Petro China dropped 2.8 percent to levels not seen since August, while China Shenhua Energy tumbled another 4.4 percent after falling 2.3 percent a day earlier.

Property counters were also down, with Green Town China falling 4.1 percent and China Overseas Land dropping 2.7 percent. Both fell to their lowest levels in about six months.

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