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Shanghai index falls over dismal service PMI
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SHANGHAI stocks sank today after data showed the growth of China’s non-manufacturing sector moderated in April and the central bank ruled out monetary easing in the near future.
The benchmark Shanghai Composite Index lost 0.89 percent to 2,010.08 points after gaining four days in a row. Daily turnover was 57.6 billion yuan (US$9.3 billion).
The HSBC China Services Purchasing Managers Index (PMI), a gauge of non-manufacturing activity at private and export-oriented companies, fell to 51.4 in April from 51.9 the previous month, HSBC Holdings Plc reported today. A reading of 50 or higher indicates the activity is expanding.
Slower growth in the service sector provided fresh evidence that the Chinese economy is cooling.
The market decline also came after the People’s Bank of China released its first-quarter report yesterday, saying it will maintain a prudent monetary policy with timely fine-tuning. The central bank said China’s economic growth may slow as the country changes the growth model.
“This indicates the government is tolerant of slower growth and prefers to boost growth through more reforms, rather than monetary easing,” said Zhang Zhiwei, an economist with Nomura.
Property developers continued the losing streak after Securities Times reported that China’s fund managers cut their holdings of property equities by 54.8 percent in the first quarter.
Metro Land Corporation Ltd slumped 4.9 percent to 4.29 yuan. Poly Real Estate, China’s second-largest developer, shed 1.2 percent to 7.19 yuan.
Cement producers also declined. Shaanxi Qinling Cement (Group) Co Ltd lost 2.1 percent to 5.06 yuan. Zhejiang Jianfeng Group Co Ltd fell 2.5 percent to 10.10 yuan.
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