Shanghai Stock Exchange plunged more than 4%

Shanghai Stock Exchange

The Shanghai Stock Exchange plunged again Friday, ending a fall of more than 4%, whereas if the big bellows concerns over persistent weaknesses of the Chinese economy after the publication of a manufacturing indicator to the lowest in six years.

The Shanghainese composite index dropped 4.27% or 156.55 points to 3507.74 points in a trade volume of 450.6 billion yuan.

The Shanghainese place, who added several sessions in sharp decline, has therefore collapsed by 11.5% over the week.

For its part, the Shenzhen Stock Exchange plunged Friday from 5.39% to 2039.40 points in exchange of 419 billion yuan.

The Chinese authorities had promised last week that they would continue to intervene “for years” to stabilize markets.

But that was not enough to convince investors (for the overwhelming majority of individuals and small carriers) while economic signals remain red.

Disappointing and dull indicators follow one another, and the recent surprise devaluation of the yuan as a desperate effort — Beijing to boost its exports and activity– only reinforced concerns about the health of the second largest economy.

Friday morning, the publication by the Caixin media group a reference PMI on Chinese manufacturing activity strengthened further the general distrust.

The provisional PMI purchasing managers for China, calculated by the financial firm Markit, rose to 47.1 in August against 47.8 in July. This is its lowest level in almost six and a half years.

A figure above 50 marks an expansion in manufacturing activity, while an index lower than this threshold indicates a contraction.

“This very gloomy PMI leaded market sentiment, investors are increasingly anxious about the weakening of China’s economic performance,” Zheshang Securities analyst Zhang Yanbing told AFP.

Reflecting these concerns, despite supported government intervention, China’s markets have experienced in recent weeks a great excitement.

To curb the spectacular collapse of local stock exchanges between mid-June and mid-July (they have lost over 30% in three weeks), Beijing was strongly intervened. A public agency, the FSB, had made massive purchases of shares.

Despite government assurances, investors now fear a premature withdrawal of these support measures.

And more generally, fears of “bubble” (an excessive overvaluation still disconnected from the real economy markets) persist and prevent any return to normal, maintaining fears of further corrections.

As for values, brokerages fell sharply, China Merchant Securities dropping 8.52% to 17.82 yuan and Citic Securities 7.85% to 18.20 yuan.

The giants in the energy sector have lost ground in the wake of declining world oil prices. PetroChina lost 3.10% to 10.00 yuan and Sinopec 2.14% to 5.48 yuan.

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