Bourses take a tum­ble amid con­cerns over con­tin­ued slug­gish de­mand

China Daily (USA) - - BUSINESS - By WANG YANFEI wangyan­[email protected]­nadaily.com.cn

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.

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