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Chinese shares slip as weak data intensify China growth worries
Chinese shares were lower for a second day running on Tuesday as China's weak manufacturing data triggered worries about the growth of the world’s second largest economy
Christina Wang 2 Sep 2015

Chinese shares were lower for a second day running on Tuesday after the country's weak manufacturing data triggered worries about the growth of the world's second largest economy.

 

Shanghai Composite Index closed at 3,166.62 points, down 1.23% from Monday.

 

The official Purchase Management Index (PMI) slid to 49.7 in August from the previous month's reading of 50. The index fell to its lowest in three years.

 

"Consistency from both official and non-official data indicates significant downward pressure to production momentum in 3Q15," Dong Tao, research analyst at Credit Suisse writes in a research note.

 

The official PMI's new orders index has declined for three consecutive months. In addition, the new orders from Markit PMI dropped to one of the lowest levels in recent years.

 

"The weakness in large companies' PMI suggests that the impact from the government's pro-growth measures has decayed rather fast. This is one of the key factors behind the fast deteriorating data heading into the second half," Tao says.

 

Analysts are now expecting GDP growth to fall below 7% in the third quarter this year. UBS is seeing more downside risks to its 6.9% growth forecast for the third quarter and 6.8% growth forecast for 2015.

 

The Shanghai and Shenzhen bourses will close from Thursday September 3 to Saturday September 5 for a public holiday. Trading on the two bourses will resume on Monday next week.

 

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