SLOW­DOWN FEARS

Man­u­fac­tur­ing in­dex falls to three-month low

China Daily (Hong Kong) - - FRONT PAGE - By XIE YU in Shang­hai xieyu@chi­nadaily.com.cn

China’s eq­uity mar­ket fell to its low­est level in a month on Mon­day af­ter an­nounce­ments from the Cen­tral Eco­nomic Work Con­fer­ence failed to lift in­vestor sen­ti­ment and man­u­fac­tur­ing data dis­ap­pointed the mar­ket. The bench­mark Shang­hai Com­pos­ite In­dex de­clined 1.6 per­cent to 2,160.86, mark­ing the long­est stretch of losses since June.

Turnover stood at 86.4 bil­lion yuan ($14.1 bil­lion), edg­ing up from 72.6 bil­lion yuan on Fri­day.

“Bear­ish sen­ti­ment still pre­vails, and the mar­ket tends to re­act rather sen­si­tively to in­for­ma­tion,” said Xin Yu, pres­i­dent of Guangzhou-based Ze­quan In­vest­ment.

The gov­ern­ment will main­tain con­ti­nu­ity and sta­bil­ity in its macroe­co­nomic poli­cies in 2014 and stick to a pru­dent mone­tary pol­icy and proac­tive fis­cal pol­icy, the state­ment from the an­nual CEWC said.

An­a­lysts said there were no sur­prises from the CEWC or from the Ur­ban­iza­tion Work Con­fer­ence, which was also held last week. No growth tar­get was an­nounced by the CEWC and the UWC didn’t lead to any sig­nif­i­cant progress on ru­ral land own­er­ship re­form.

“Mes­sages sent by the two con­fer­ences have been con­sis­tent with this lead­er­ship’s stance of main­tain­ing the sta­bil­ity of growth, im­prov­ing the qual­ity of growth and push­ing for­ward struc­tural re­forms. I would say the im­pact on the mar­ket is neu­tral,” said Xin.

He said that tight year-end liq­uid­ity helped drive down the mar­ket on Mon­day, as did a “nor­mal cor­rec­tion” af­ter blue chips gained over the pre­vi­ous month.

The in­dex had risen al­most 8 per­cent as of early De­cem­ber, com­pared with mid-Novem­ber.

“We are head­ing for the end of the year. In­sti­tu­tional in­vestors are stay­ing on the side­lines as com­pa­nies close books at the end of the year, caus­ing a drain on liq­uid­ity. The im­pend­ing re­sump­tion of ini­tial pub­lic of­fer­ings in Jan­uary is also at­tract­ing cap­i­tal,” said Zito Ji, a pub­lic mu­tual fund an­a­lyst based in Shang­hai.

The flash PMI from HSBC Hold­ings Plc dropped to 50.5 for De­cem­ber from 50.8 in Novem­ber, a three-month low, as out­put gains eased and em­ploy­ment weak­ened.

An­a­lysts said that the weaker- than- ex­pected fig­ure hit in­vestors’ con­fi­dence.

“The de­cline in the flash PMI sug­gests growth mo­men­tum has started to weaken. We be­lieve this trend will con­tinue in the first half of 2014, as mar­ket in­ter­est rates keep ris­ing, push­ing up fi­nanc­ing costs for com­pa­nies,” said Zhang Zhi­wei, an econ­o­mist with No­mura Hold­ings Inc.

The State Coun­cil, which is China’s cab­i­net, said on Satur­day in a state­ment that the pri­mary over-the-counter mar­ket is be­ing opened to “qual­i­fied” com­pa­nies from any­where in the coun­try. The state­ment was read by an­a­lysts as a fur­ther open­ing up of the OTC mar­ket to nu­mer­ous small busi­nesses.

Xin said that the move won’t di­vert cap­i­tal from the A- share mar­ket, as the OTC mar­ket al­ready was a ma­jor fund­ing chan­nel for rel­a­tively small com­pa­nies.

Un­til now, how­ever, only un­listed com­pa­nies in hightech zones in four cities were el­i­gi­ble to raise funds through the na­tional OTC mar­ket, called the Na­tional Eq­ui­ties Ex­change and Quo­ta­tions Sys­tem. At present, 339 com­pa­nies are listed on the mar­ket.

SHI YAN / FOR CHINA DAILY

The bench­mark Shang­hai Com­pos­ite In­dex de­clined 1.6 per­cent to 2,160.86 on Mon­day, mark­ing the long­est stretch of losses since June.

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