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September 10, 2016

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Shares drop as inflation data dismissed

SHANGHAI shares dipped yesterday as investors were not moved by the release of August inflation data, suggesting that no additional stimulus measures were forthcoming.

The Shanghai Composite Index edged down 0.55 percent to close at 3,078.85 points. For the week, the Shanghai gauge added 0.38 percent.

Shares of medical device firms dropped yesterday, as China Resources Wandong Medical Equipment Co lost 2.61 percent to 19.41 yuan (US$2.91), while newly-listed China Film Group Corp shed 3.66 percent to 31.56 yuan.

China’s consumer price index, the main gauge of inflation, slowed to its weakest pace in nearly a year in August, according to official data released yesterday, as food costs fell.

Also, an encouraging moderation in producer price deflation added to growing evidence that the Chinese economy is on track to stability.

“Our view remains that monetary policy will be neutral, with stable credit growth, for the rest of the year,” said Zhu Haibin, chief China economist at JP Morgan, after the inflation data were released.

“We assume a rate cut possibly in October, considering moderate slowing in growth, benign CPI inflation and the Federal Reserve not expected to hike until December, while other major central banks are still on an easing mode.”


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