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Shanghai shares dip as China PMI at 4-month low

By Ye Zhen | January 2, 2014, Thursday | Online Edition

Shanghai stocks declined in the morning session after data showed China’s manufacturing activity eased to a four-month low in December, fueling concerns about economic slowdown.

The benchmark Shanghai Composite Index shed 0.4 percent, or 9.28 points, to 2,106.70 by the noon break. Half-day turnover was 33.5 billion yuan (US$5.5 billion).

China’s official Purchasing Managers’ Index, a gauge of manufacturing activity slanted more towards state-owned firms, dropped to 51 in December, from 51.4 in November, the National Bureau of Statistics said yesterday.

This is the first moderation since June and the reading was the lowest since August. A reading of 50 or higher indicates the activity is expanding.

“The figure is consistent with our view that the third-quarter marked the peak of the latest round of economic recovery and the industrial activity eased towards the year-end,” Zhu Haibin, chief economist for China at JPMorgan.

Zhu said the slowdown was due to a shift in policy stance from stabilizing growth in the third quarter towards structural reform in the fourth quarter.

The investment bank expects the pace of China’s economic growth to ease to 7.4 percent in 2014 from 7.6 percent in 2013.

Coal producers declined the most. Shanxi Lu'an Environmental Energy Development Co Ltd lost 2.7 percent to 10.38 yuan. China Shenhua Energy Co Ltd slipped dropped 1 percent to 15.66 yuan. Yang Quan Coal Industry (Group) Co Ltd slipped 2.1 percent to 6.91 yuan.

Financial shares were also weak. CITIC Securities, China’s biggest brokerage, shed 1.6 percent to 12.54 yuan. Sinolink Securities Co Ltd lost 2 percent to 16.63 yuan.

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