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Shanghai shares fall on deflationary pressure
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SHANGHAI stocks fell from a seven-year high today, after inflation data weakened in May and investors waited for MSCI Inc’s decision on whether to add Chinese mainland A shares into its global gauges.
The Shanghai Composite Index slid 0.4 percent to 5113.53 points, erasing its previous gains hit to highest level since January 2008.
Industrial and financial companies led the fall. CRRC Co, formed by merging rail companies CSR Co and China CNR Co, dived 9.3 percent to 29.38 yuan (US$4.70). While Industrial Bank Co lost 2.7 percent to 20.12 yuan, with one of its former employees causing scandal of running off with 3 billion yuan.
The consumer-price index rose 1.2 percent in May, National Bureau of Statistics said today, weaker than 1.5 percent growth in April and 1.4 percent in March. While the producer-price index fell for a 38th straight month to 4.6 percent.
“Data in May showed that China’s economy is still facing the a rising low inflationary pressures,” said Chen Hufei, senior analyst of Asset Management at Bank of Communication, “And the earning performance of industrial enterprises haven’t been improved yet under the preferential policies.”
Meanwhile, investors are waiting for the MSCI’s announcement on Wednesday about whether the A shares of will be added to the indexes of the U.S. provider. If added, the yuan-dominated stocks will make up nearly 1 percent of the MSCI benchmark in the initial stage.
“MSCI’s inclusion is not likely this time,” Li Bo, senior investment consultant at GF Securities Co, told Shanghai Daily.
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