China’s stocks are presently at their lowest point in the last three months. Concern’s over its economic outlook just as the date for the decision of whether or not it will join global indexes is right around the corner.
The Composite Index of Shanghai dropped by 3.2% as markets in the mainland opened for the first time since Wednesday. ChiNext, the index that tracks smaller companies dropped by almost 6%, it’s lowest point in over a month, this was caused mainly by the Leshi Corp’s 10% drop. As far as Fixed Asset Investment goes, the first five months of this year were all trailing behind 38 economist’s estimates, this was taken on Monday. The CNY (Yuan) is right now approaching a five year low.
Low levels abound
The retreat seen on Monday was a break in the seeming calm that was cast over the Chinese market over the last month or so. The gauge of 100 day volatility from last week fell to its lowest point since January of 2015. It also comes at the same time it peaked last year, which was its highest point. Economic activity is greatly subdued, but the government seems to be in no hurry over stimulus packages. As of now, officials of the concerned ministries are attempting to reign in on the debt burden and plug the capital outflows.
Government not likely to cut interest rates
While the market data for May is not looking up, or good, it also seems like the Government is not going to cut interest rates keeping in mind the recent depreciation of the Yuan and the pressure that has on the economy now. Investors are also dumping their shares in light of the MSCI decision as it is still an uncertainty.
Fixed asset investment in China has increased in the January to May period by 9.6%. It is the slowest since 2000. The NBS (National Bureau of Statistics) also showed that industrial production is on a rise and that it rose by 6% from last year and that retail sales, was, when compared to last year, up by 10%.
The Hang Seng Index dropped its steepest in four months. It went down 2.4%, extending its two day drop to 4.5%. CNY also slid 0.4%, the steepest in two months. The wise thing to do, according to the CEO of Partner’s capital will be to sell.