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Benjamin Robertson

Xie Yu

It was a case of data over diktat in the markets on Monday as disappointing Chinese industrial and investment numbers overshadowed more bullish prognostications from Premier Li Keqiang.
Chinese markets slumped, with small and mid-caps especially hard hit, as investors sought out the relative safety of blue-chip stocks favoured by government support funds.
The benchmark Shanghai Composite Index dropped up to 4 per cent  before a final half-hour rally in the financial sector and select state-owned enterprise shares carried the index to a moderately more respectable close of 3,114.8 points, down 2.67 per cent for the day.
The Shenzhen Composite and technology-heavy ChiNext indices fared less well, finishing 6.65 per cent and 7.49 per cent lower at 1,662.89 and 1,906.21 points respectively, the worst one-day performance in three weeks.
The large trading swings suggested volatility had returned after several days of calm.
The impetus for the sell-off was a series of downbeat economic figures.
China’s  growth in fixed-asset investment, one of the crucial drivers of the economy, slowed to 10.9 per cent in the first eight months of the year – the weakest pace in nearly 15 years – data from the National Bureau of Statistics showed on Sunday.
Factory output was also weaker than expected, rising 6.1 per cent last month from  August last year.  The markets had expected a 6.4 per cent increase, compared with July’s 6 per cent.
“The mixed economic data, released over the weekend, seem to slightly increase the chance of further policy support. Retail sales were actually stronger than expected but industrial production and fixed-asset investments were slightly disappointing coming below the consensus forecast figure,” said Gerry Alfonso, a director of Shenwan Hongyuan Securities in Shanghai.
Monday’s fall came after the premier last week sought to reassure  global investors the country’s economic growth and financial sector reform programme were still on track.
“China is not the origin of risks for the world economy. We are the source to drive global economic growth,”  Li told delegates to the World Economic Forum in Dalian.
Haitong Securities sank more than 6 per cent at one point as investors reacted to a Friday night announcement that five brokerages, including Haitong, had been fined by regulators for inadequate client identity checks.
 Alongside the wider financial sector, Haitong rallied in late trading to close at 12.83 yuan, down 0.39 per cent on  the day.
The Hang Seng Index finished 0.27 per cent higher at 21,561.9 points and the  H-share index closed 0.11 per cent firmer at 9,728.72, with both indices off their mid-morning highs.
Shares in China Railway Construction Corp rose in tandem with major state-owned enterprises after the State Council issued long-anticipated  reform guidelines for the sector, which included the likelihood of further mergers.
The engineering firm’s shares gained 1.67 per cent to HK$10.98 in Hong Kong and 7.91  per cent to 14.59  yuan in Shanghai.
Citing “macro uncertainties”, investment bank Jefferies lowered its June 2016 targets for the Shanghai Composite Index from 4,850 to 4,300 points, and the H-share index  from 18,500 to 13,500 points.
 
 


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A stock broker prints a list of the day's transactions at Hong Kong Exchanges and Clearing. Photo: EPA

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