Bourses take a tumble amid concerns over continued sluggish demand
China’s A-share market tumbled on its first trading day of 2019 amid tepid market sentiment and weaker manufacturing data.
Analysts expect the market would likely stage a rebound in the second half of 2019 with more supportive government measures set to bolster confidence.
The Shanghai Composite Index closed at 2465.29 points, ending down 1.15 percent on Wednesday, while the Shenzhen Component Index closed at 7429.27 points, down 1.25 percent.
The stock market opened modestly higher earlier on hope of progress on trade disputes with the United States and later plunged with the release of data showing the factory activity in China fell below 50 in December for the first time in more than two years.
The Caixin manufacturing PMI declined in December to 49.7, the lowest level since May 2017.
The data show a trend similar to earlier data from the National Bureau of Statistics, with the official PMI falling to 49.4 in December, suggesting soft growth momentum in the manufacturing sector.
“Trade growth may have weakened and domestic demand growth could have stayed soft. Price inflation was lower amid falling commodity and oil prices, which could have added downward bias to the headline manufacturing PMI readings,” wrote analysts from Goldman Sachs in a note. “We continue to expect more loosening measures to be announced by the government to support economic growth,” they added.
An ominous beginning to 2019 follows earlier worries of continued sluggish demand and weak recovery
The Shanghai Composite Index ended the trading year at 2493.90, and fell by 24 percent in 2018, putting the index’s performance almost at its worst since the 2008 global financial crisis.
Analysts expect that market sentiment may recover in the sec- as uncertainties persist. ond half as earlier pledges to boost confidence by the government may take some time to take effect.
Last year, financial authorities undertook a string of measures to shore up growth and calm traders, including measures to cut the amount of reserves held by banks, and plan to roll out more concrete measures to help ease financing stress of private enterprises.
The outlook for the next three to five months could be hard to predict, but looking from a three to fiveyear perspective, this year might be the right time to invest, and longterm buying opportunities are emerging, according to analysts from Xingye Securities.
Wang Jun, an analyst at Huachuang Securities, said he expected more supportive and loosening policies, both on the monetary and fiscal fronts, and pointed to better investment opportunities in 2019 in some sectors, such as infrastructure construction.
Stocks linked to regional development, such as the Xiongan New Area outside Beijing, are worth purchasing as the government seeks to achieve high-quality growth, according to Wang.