SHANGHAI: China stocks fell on Tuesday, snapping a five-day winning streak after data showed manufacturing activity unexpectedly contracted in October and cast a cloud over recent indicators pointing to a nascent recovery in the world’s second-largest economy.
** The blue-chip CSI 300 Index dropped 0.7% and the Shanghai Composite Index lost 0.4% by the midday recess.
** Both Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index declined 1.8%.
** For the month, the CSI 300 was up 0.6% and the HSI dropped 1.7% so far. The market struggled to rebound as sentiment remained weak despite authorities’ stimulus policies.
** The official purchasing managers’ index (PMI) fell to 49.5 in October from 50.2, dipping back below the 50-point level demarcating contraction from expansion, and missing a forecast of 50.2, data from the National Bureau of Statistics showed.
** “The unexpected decline of manufacturing PMI shows the recovery in China is a bumpy road as domestic demand is still quite weak,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding it reinforces the case for stronger fiscal policy support.
China stocks rise on support signs; HK muted
** Foreign investors sold a net 6.7 billion yuan ($915.66 million) of Chinese shares via the Stock Connect so far on Tuesday.
** Shares in automobiles and photovoltaic companies dropped 2.6% and 2.2%, respectively, to lead the decline. Banks and property developers also lost more than 1.5% each.
** Shares in China Vanke, one of the top Chinese developers, slumped nearly 3%. Last Friday, Vanke reported weak results for the third quarter.
** “If Vanke were to come under stress, this would have implications for the other state-linked Chinese developers that are still performing,” CreditSights said in a note.
** In Hong Kong, tech giants were down 2.2% and mainland developers slumped 3%.
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