Markets fall as Chinese production weakens
Mainland figures fuel fears after US Fed chief hints at pulling back on stimulus measures
Stock markets slipped from Japan to Australia yesterday as evidence of weakening manufacturing activity in China rocked confidence about the strength of the rebound in the world's second-biggest economy.
The deteriorating outlook on the mainland sent Japan's Nikkei 225 stock average slumping 7.3 per cent, registering the deepest loss since the 2011 earthquake and tsunami. The Hang Seng Index dropped 2.54 per cent to 22,669.68, its biggest slide in seven weeks. The Shanghai Composite Index fell 1.16 per cent while Australia's S&P/ASX 200 Index dropped 1.99 per cent.
Deepening doubts about China's economic prospects added to market jitters after Ben Bernanke, chairman of the US Federal Reserve, indicated on Wednesday that the United States might begin winding back stimulus measures by reducing the pace of bond purchases in the autumn.
The HSBC flash purchasing managers index for China fell below the 50 - the line which separates expanding from contracting activity - in May for the first time in seven months, slipping to 49.6 from 50.4 in April. Output still climbed, but at a slower rate, while new export orders dropped. Employment also worsened, the survey conducted by HSBC and UK-based data provider, Markit, showed.