Weak Factory Data causes fall in Chinese Stocks

Chinese stocks experienced a drop after shares in Hong Kong hit a fall for the sixth consecutive week due to an unforeseen slump in the country’s manufacturing data.

The weak factory data, the first fundamental release of the country’s economy in the third quarter, reached its lowest level in 15 months and caused the Hang Seng China Enterprises Index to lose 1.7% to 11,633.61 while the Shanghai Composite Index dropped 1.9%.

Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai, stated that “the support measures introduced by the authorities in the mainland to stabilise the market have little impact in share prices in Hong Kong where investors are more sensitive to

Elsewhere, Gao Xiqing, an architect of China’s stock market and a former top regulator, offered a different view on the recent stock market events.

According to him, policy makers helped in the inflation of equity prices but failed to handle the response to the slump.

As such, India’s shareholders are the ones who are reaping the “benefits” of this unexpected drop in the chinese stock market.

International investors are removing their money from China, adding to the record outflows through the Shanghai-Hong Kong exchange link while injecting $705 million into India over the same period.

Jonathan Schiessl, head of equities at Ashburton Investments, confirmed that the “fund has cut its exposure to China by 1% in the past month to invest in Indian equities and raise its cash position.”

Priscilla Camryn By: Priscilla Camryn
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