Chinese Stock Index Declines as Holiday Period Ends

The benchmark stock index of China declined after the 3-day holiday as reports showed that the manufacturing industry of the country has shown weaker growth. Apart from that, the fate has been pretty similar for the profits of the different industrial companies as well.

The benchmark gauge of Chinese stocks, the Shanghai Composite Index went down by 0.2% and is currently at 2,174.32. A total of 493 companies showed increase in their respective stock prices, while the fate of 406 others was exactly the opposite. On the other hand, the CSI 300 Index was more or less unchanged as it is currently at 2,447.69. The financial markets of China incidentally were shut down from 29th April through 1st May. The Hang Seng China Enterprises Index showed a drop of 0.9%.

According to the Analyst of Dongxing Securities Co., Liu Guangming, after the reports from the manufacturing industry came out, most of the investors were expecting that the economy will experience further slide. Guangming added that the earnings currently lack positive surprises and no good news is expected either that will push up the stocks.

The Shanghai gauge has experienced a decline of 11% from its value on 6th February as the investors are concerned on the slow growth which is hurting the earnings. The index is currently trading at 11.6 times of the reported profit of the same. The average for the last 5 years has been of 16.9. A separate gauge for the material and energy stocks in the CSI 300 declined by 1.6% and this is the biggest slump out of the 10 industry groups. Jiangxi Copper experienced a loss of 2.9% and each share is currently priced at 20.23 Yuan. The company recorded a decline of 32% in the 1st quarter profit of the same. On the other hand, the biggest coal producer of the country, China Shenhua Energy Co. went down by 1.5% and each share is now priced at 20.19 Yuan.

As far as data released by the National Bureau of Statistics and China Federation of Logistics and Purchasing is concerned, the official Purchasing Managers’ Index of China has declined to 50.7, less than 50.7 which was forecasted by the economists. HSBC Holdings conducted a private survey and according to the same, the index should have been at 50.4. Incidentally, any reading above 50 denotes expansion.