SHANGHAI, June 1 China stocks started the month
on a bearish note on Thursday after a private business survey
showed manufacturing activity unexpectedly contracted in May,
fuelling worries that the economy may be cooling more rapidly
The blue-chip CSI300 index finished 0.1 percent
higher at 3,497.74 points, while the Shanghai Composite Index
lost 0.5 percent to 3,102.62 points.
Small-cap stocks led the market's decline, with the
closely-watched start-up board ChiNext slumping 2
percent to the lowest closing level in nearly 28 months.
Sentiment was hit by the gloomy Caixin/Markit Manufacturing
Purchasing Managers' index (PMI), which contrasted sharply with
official readings on Wednesday that suggested a modest but
steady pace of growth from the previous month.
The index fell to 49.6, weaker than expected and below the
50-point mark which demarcates growth and contraction. The
reading fell for the third month in a row.
The fall in the Caixin index appears "consistent with the
recent decline in the price of industrial metals" and is
"consistent with our broader outlook on the Chinese economy,"
said Julian Evans-Pritchard, China Economist at Capital
Economics, in a research report.
"After all, we have long been warning that the rebound in
growth during the second half of last year would prove
The upbeat mood of the previous session - triggered by
regulators' share sale restrictions - also evaporated, as
worries deepened about excessive government intervention.
Chen Xi, a strategist at Dongguan Securities, said
regulators' tougher restrictions on share sales, which were
intended to stabilise the market, could backfire, as "capital
would think twice before entering the stock market".
That could hurt stock valuations, especially for small caps.
For the day, material stocks dragged the most
among main sectors, echoing an across-the-board correction in
the commodities market after the Caixin survey.
(Reporting by Luoyan Liu and John Ruwitch; Editing by Kim