New | China stocks decline after weak factory output, escalating corruption probe

Chinese stocks declined further on Monday after two separate gauges showed the country’s manufacturing sector remain in contraction territory, while the government targeted top fund manager and company executives in an escalating crackdown on corruption.

Hong Kong’s Hang Seng Index dropped for a fourth straight session, down 1.2 per cent to 22,370.04. The Hang Seng China Enterprises Index fell 1.5 per cent to 10,240.33.

The benchmark Shanghai Composite Index declined for a second consecutive day, off 1.7 per cent to 3,325.09. The large-cap CSI300 retreated 1.6 per cent to 3,475.96. The Shenzhen Composite Index lost 1.3 per cent to 1,987.97 while the Nasdaq-style ChiNext Index shed 1.9 per cent to 2,432.04.

The preliminary Caixin China Manufacturing Purchasing Managers’ Index (PMI), a closely watched measure of the nation’s manufacturing activity, showed a better-than-expected 48.3 in October, from 47.2 in the previous month. But the index was still below the 50-mark separating expansion from contraction and marked an eighth straight month of contraction.

Over the weekend, China’s official manufacturing PMI remained unchanged at 49.8 for October. The reading has shrunk for a third month in a row.

“In our view, it (official PMI) demonstrates continued sluggishness in the manufacturing space,” analysts from Bank of America Merrill Lynch said in a Monday report.