It was another bad session on the Shanghai stock market today as economic weakness and a poor lead from the US and European markets weighed on sentiment.
The Shanghai composite index was down as much as 4.5% after lunch, hitting a low of 3,494 before a small rally to finish at 3,509, down 4.21%. That brings the week’s losses to a stunning 460 points, or 11.60%.
That’s an incredible fall when authorities are trying so hard to underwrite the market and stem the bleeding.
But data out today confirmed the economy is slowing faster than most analysts thought. The Caixin Markit ‘flash’ manufacturing PMI printed 47.1, down from 47.8 last month and was much weaker than the 47.7 analysts expected.
That’s the worst result since the depths of the GFC and resulted in more calls for economic stimulus. HSBC economists Julia Wang and Jing Li wrote this afternoon that they believe:
Further policy easing measures from monetary easing to fiscal support are needed. We forecast another 25bps policy rate cut and 100bps reserve ratio cut in Q3, possibly in the coming weeks.
But at this point in the cycle it seems that, for today at least, talk of stimulus hasn’t helped support the market, with all 10 sectors down. Financials did best with a drop of just 3% but consumer cyclicals fell 5.7% and the telecommunications and technology sectors were down 5.77% and 5.86% respectively.