SHANGHAI: 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 than expected. The blue-chip CSI300 index finished 0.1 per cent higher at 3,497.74 points, while the Shanghai Composite Index lost 0.5 per cent to 3,102.62 points. Small-cap stocks led the market’s decline, with the closely-watched start-up board ChiNext slumping 2 per cent 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.
