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Shanghai Composite drops below 2,000-point mark

By Ye Zhen | March 10, 2014, Monday | Online Edition

SHANGHAI stocks fell below the 2,000-point mark for the first time in nearly two months as poor economic data released over the weekend eroded market confidence about economic growth.

The benchmark Shanghai Composite Index dropped 2.86 percent to 1,999.07, below the 2,000-point level for the first time since January 20. Turnover was 95 billion yuan (US$15.6 billion) for the day.

Market watchers said disappointing economic data and fading expectations for new policies led to the market’s biggest drop since June 2013 when the worst liquidity crisis in a decade rocked China’s financial market.

“Weak economic data signaled downward pressure on economy in the short term and heightened concerns that economic slowdown may continue in the second quarter,” Ping An Securities said in a note today.

Data released on Saturday by the General Administration of Customs showed that China’s exports shrank 18.1 percent from a year earlier to US$114.1 billion in February. The decline was in sharp contrast with a growth of 10.6 percent in January.

Meanwhile, the Consumer Price Index, the main gauge of inflation, rose 2 percent year on year in February, moderating from a gain of 2.5 percent in January, according to data from the National Bureau of Statistics. The Producer Price Index, a measure of upstream inflation, fell 2 percent from a year earlier, widening from a 1.6 percent decrease in January.

The CPI growth was slowest in 13 months while PPI has been in deflationary territory for two years, fanning concerns about weak demand.

Meanwhile, high hope for reforms and favorable policies -- the main market driver in the past few days – is diminishing as the annual policy meeting of the National People’s Congress will close this week.

“Although government reports made at the meeting stressed market-oriented reforms, they were largely in line with the guideline adopted at the third plenum of the 18th Communist Party of China Central Committee, offering no surprise for the market,” said Ping An.

Insurers and airlines slumped following the missing of a Malaysia Airlines passenger jet.

Ping An Insurance (Group) Company of China lost 3.6 percent to 36.18 yuan. China Life Insurance Co Ltd declined 3.7 percent to 13.11 yuan.

China Eastern Airlines Corp Ltd fell 3.6 percent to 2.44 yuan. China Southern Airlines Co Ltd slipped 3.5 percent to 2.49 yuan.

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