China stocks fall for second day as slowdown worries haunt market

Mainland Chinese stocks fell for a second straight day on Wednesday after recent data suggested the Chinese economy is losing momentum as the effect of policy easing begins to fade.

The Shanghai Composite Index struggled to keep its head above water for most of the day, before dropping 0.3 per cent, or 8.37 points, to close at 3,135.35.

On Tuesday, the index ended 0.3 per cent lower. In April, it lost 2.1 per cent, the worst monthly decline this year.

“Chinese stocks are consolidating after PMI data suggests risk to growth activities in the second quarter and given that regulations remain tight,” Jimmy Zhu, chief strategist at Fullerton Markets said.

On Tuesday, the April Caixin Manufacturing Purchasing Managing Index, a privately-conducted gauge of China’s manufacturing sector, came in at a worse-than-expected 50.3, down from 51.7 in March. It was also the lowest level in seven months.

Over the weekend, China’s official April PMI came in at a six-month low of 51.2.

“Our China Activity Proxy has been pointing to slower growth in recent months, after peaking in December. But the PMI readings for April appear to confirm this downward trend and suggest that the slowdown has extended into the second quarter,” said Julian Evans-Pritchard, China Economist for Capital Economics, in a recent research note.