BEIJING: China’s stocks fell, extending the benchmark index’s biggest monthly loss in six years, as a drop in an official manufacturing gauge re-ignited concern the economic slowdown is deepening.
The Shanghai Composite Index slid 2.2 percent to 3,581.17 at 9:42 a.m., the biggest loss since July 8, as technology and energy companies slumped. The gauge is trading near its 200-day moving average of 3,560.25, a level that’s closely watched by analysts who use price patterns to develop trading strategies. The gauge rebounded off that moving average during intraday trading on July 8 and July 9, and again on July 28.
The Shanghai Composite posted its steepest monthly drop since August 2009 amid concern the economic growth is faltering at a time when traders are cutting their leveraged bets and a flood of measures to revive interest in equities aren’t working. The official Purchasing Managers’ Index was 50 in July, the statistics bureau said over the weekend. That compared with the median estimate of 50.1 in a Bloomberg survey.
“The recent economic data have made investors believe that the market isn’t supported by earnings or fundamentals, particularly when the market is in a downward cycle,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “Even after the decline, some stocks are still expensive.”
Margin traders reduced holdings of shares purchased with borrowed money for a sixth day on Friday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling to a four-month low of 860 billion yuan ($138.5 billion).
