SHANGHAI: China stocks closed down on Thursday after data showing activity in the country’s factory and services sectors swung into the negative territory in March raised worries over the impact of the fresh COVID-19 restrictions on the economy.
The blue-chip CSI300 index fell 0.7% to 4,222.60, while the Shanghai Composite Index lost 0.4% to 3,252.20 points.
The Hang Seng index fell 1.1% to 21,996.85, while the China Enterprises Index lost 1.1% to 7,525.89 points.
Activity in Chinese manufacturing and services simultaneously contracted in March for the first time since the height of the country’s COVID-19 outbreak in 2020.
The world’s second-largest economy is now at the risk of slowing sharply as authorities restrict production and mobility in many cities, including Shanghai and Shenzhen, to stamp out fresh COVID-19 outbreaks.
“Markets so far have underestimated the severity of the situation in China because it is difficult to fully reconcile and understand,” said Nomura analysts in a note. “In the next couple of months, we expect global investors to better reflect these shocks in their valuations of various asset classes.” ** China will rollout policies to stabilise the economy as soon as possible, as the downward pressure in the economy increased, state media CCTV quoted a cabinet meeting as saying on Wednesday.
The country will refrain from introducing measures not conducive to stabilise market expectations, the meeting also said.
Semiconductors fell 2.5%, tourism firms lost 2.1% and new energy stocks slumped 3.2%.
Real estate developers gained 0.8% and banks added 1.3%. Market participants are expecting the central bank to cut rates and lower reserve requirements for banks.
China reported 1,839 confirmed coronavirus cases and 6,720 new asymptomatic cases for March 30.