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Stocks see biggest plunge in a month

By Xie Yu | China Daily | Updated: 2013-05-24 07:26

China's stocks saw their biggest losses in a month on Thursday, after the release of the disappointing PMI figures and Japan's worst equity plunge since 2011.

The benchmark Shanghai Composite Index slumped 1.16 percent to 2,275.67 points. Trade volume decreased to 111.1 billion yuan ($17.9 billion) from Wednesday's 115.3 billion yuan.

But analysts attributed the drop mainly to corrections in other Asian stock markets.

"The dive in Japan's equity market has something to do with the yen's appreciation against the US dollar, but has more to do with the recent stock market surge. The plunge on Thursday ended the bull market in Japan, and will also trigger corrections in neighboring markets," said Yin Zhongli, a finance researcher with the Chinese Academy of Social Sciences.

Hong Kong's benchmark Hang Seng Index dropped 2.38 percent to 22,669.68 on Thursday.

The lower-than-expected PMI reading for May also disturbed investors' confidence in the Chinese market.

HSBC said that its preliminary purchasing managers' index fell to a seven-month low of 49.6 in May, compared to 50.4 in April.

Analysts had expected a slight decline to 50.3 for the most recent month.

Domestic investors are more concerned about economic recovery than the fate of overseas markets.

The impact of Japan's stock market slump and the possible scaling back of quantitative easing in the United States should not be too big, as foreign investors' access to China's A-share market is somewhat limited, said Li Xin, an investment consultant with Changjiang Securities Co Ltd.

"It seems there won't be clear signals of strong economic recovery until the third quarter. But on the other hand, the market remains optimistic about a relative loose monetary policy," he added.

 

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