Equities fall on weak US job data
Updated: 2011-09-06 09:50
By Irene Shen (China Daily)
SHANGHAI - Stocks on the Chinese mainland fell to the lowest level in almost 14 months as a drop in a Chinese services index to a record low and a report showing no US jobs growth last month boosted concerns that global economic growth is stalling.
Anhui Conch Cement Co plunged 10 percent. PetroChina Co sank to a record low and Jiangxi Copper Co dropped the most in a month after the US unemployment rate stayed at 9.1 percent last month. Shenzhen Development Bank Co slumped after the China Securities Journal said new reserve requirements for 14 listed banks may increase by about 700 billion yuan ($110 billion) over the next six months.
The benchmark Shanghai Composite Index, lost 49.5 points, or 2 percent, to 2,478.74 on Monday, the lowest level since July 19, 2010. The CSI 300 Index retreated 2.1 percent to 2,743.82.
"Tightening policies have hurt economic growth," said Zhang Han, a strategist at Guotai Junan Securities Co. "The US economic slowdown is making investors more pessimistic, adding to concerns over domestic problems like inflation. The market will continue to fall in the short term."
The Shanghai gauge has slumped 12 percent this year as the central bank raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to tame inflation. It is valued at 11.4 times estimated earnings, a record low, according to daily data compiled by Bloomberg.
The August drop in the Chinese services-industry index was reported by HSBC Holdings Plc and Markit Economics on Monday. The official non-manufacturing purchasing managers' index issued on Saturday by the China Federation of Logistics and Purchasing dropped to 57.6 in August from 59.6 in July. A number above 50 indicates expansion.
Anhui Conch, China's biggest maker of the building material, slid by the daily limit to 19.72 yuan, the most since October 2008, on concern that slowing investment in housing and railways will curb demand for building materials. Huaxin Cement Co slumped 10 percent to 20.50 yuan.
Investors should "brace for more pain" amid manufacturing growth slowing globally and prospects that Chinese monetary policies will loosen any time soon fade, according to China International Capital Corp (CICC).
China's August manufacturing data was one of the lowest since the global economic recovery, while factory output in South Korea, Taiwan, France, Italy, the United Kingdom and Sweden all slumped, Hao Hong, a global strategist at CICC, wrote in a report on Monday.
US government data showed payrolls were unchanged in August, the weakest reading since September 2010. The median forecast in a Bloomberg News survey called for an increase of 68,000.