SHANGHAI: China stocks snapped a five-day winning streak to end lower on Tuesday after data showed manufacturing activity unexpectedly contracted in October, casting a cloud over recent indicators that had suggested a nascent recovery in the world’s second-largest economy.

The blue-chip CSI 300 Index dropped 0.3% and the Shanghai Composite Index slipped 0.1% at market close.

Both Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index declined 1.7%.

For the month, the CSI 300 slumped 3.2% and the HSI dropped 3.9%, both logging a third straight month of declines 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” and reinforces the case for stronger fiscal policy support, said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Foreign investors sold a net 4.7 billion yuan ($642.37 million) of Chinese shares via the Stock Connect on Tuesday.

Shares in automobiles and photovoltaic companies dropped 2.3% and 1.9%, respectively, to lead the decline.

China Vanke, one of the top Chinese developers, slumped 2.3%. 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.