China’s stocks fall to one-month low after manufacturing data
SHANGHAI, Dec 1 — China’s benchmark stock index fell to the lowest level in a month after data showed manufacturing conditions are deteriorating, overshadowing the International Monetary Fund’s decision to add the yuan to its basket of reserve currencies.
The Shanghai Composite Index slipped 0.3 per cent to 3,435.46 at 9.35am local time, led by financial companies. The official purchasing managers index slipped to 49.6 last month, the National Bureau of Statistics said Today. That compared with a median estimate of 49.8 in a Bloomberg survey of economists. The yuan was little changed in offshore trading in Hong Kong after the IMF said the Chinese currency will join the dollar, euro, pound and yen in its Special Drawing Rights basket.
While yuan inclusion is short-term negative for Chinese stocks, it is positive in the long term, UBS AG Group analysts wrote. The risk of depreciation is likely negative for the market on a three- to six-month time horizon, they wrote. Still, increased capital account opening and further domestic capital market development, coupled with very low global exposure to Chinese assets currently, could bring more inflows in the long term in the stock market, they said.
The Shanghai index climbed 0.3 per cent to 3,445.41 yesterday, erasing a loss of as much as 3.2 per cent, as a gauge of volatility traded near its highest level in two months. The benchmark gauge climbed 1.9 per cent last month, the smallest gain since January.
The CSI 300 Index lost 0.3 per cent. Hong Kong’s Hang Seng China Enterprises Index halted a six-day losing streak, rising 1.2 per cent, while the Hang Seng Index added 1 per cent.
Margin traders reduced holdings of shares purchased with borrowed money for a sixth day yesterday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling to 705.7 billion yuan (RM469.55 billion).
“The announcement of the inclusion of RMB in the SDR basket is a positive event,” Morgan Stanley analysts led by Chetan Ahya wrote on a note to clients. “The reforms China has undertaken/will undertake to achieve SDR status could help on issues like market access and liquidity, factors which index providers consider for membership,” they wrote, adding that A shares may be included in MSCI Inc. benchmark indexes by May 2017. — Bloomberg
