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September 15, 2015

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Home » Business » Finance

Shares drop on economic data fears

By Leng Cheng | September 15, 2015, Tuesday | Print Edition

SHANGHAI shares slumped the most in three weeks yesterday as concerns over economic data offset the optimism of government’s long-term reforms of state-owned enterprises.

The Shanghai Composite Index shed 2.7 percent to 3,114.8 points.

“Economic data don’t look good and the reform of SOEs needs more substantial moves to cause any big reaction among investors,” said Li Bo, a senior investment consultant at GF Securities Co.

Industrial output rose 6.1 percent in August, missing economists’ estimate of 6.5 percent surveyed by Bloomberg News, while fixed-asset investment continued to slow in the first eight months of this year, according to the National Bureau of Statistics on Sunday.

China has released a guideline on reforming SOEs, promoting “diversified ownership” and encouraging their shares to go public.

ING Group said in a note yesterday that previous stock market rout will only reinforce the consensus view that SOE reform has been disappointingly slow, since it relies heavily on the capital market.

“A downward trend is obvious for this week’s trading,” Li said. “De-bubbling process is undergoing among small-capital shares after deleveraging process is almost done, while institutional investors might wait for the Federal Reserve’s interest rate decision this Wednesday.”

Investment bank Jefferies yesterday cut its long-term forecasts on Shanghai’s benchmark index to 4,300 points by June 2016 from 4,850 points citing macro uncertainties.

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