SHANGHAI stocks fell for the third day in a row yesterday despite pledges by China’s top brokerages to pump money into a government-backed market stabilization fund operated by the China Securities Finance Corp.
The benchmark Shanghai Composite Index shed 0.2 percent to settle at 3160.17 points.
It has slumped 39 percent since a mid-June high despite government measures to try to halt the rout.
A report in yesterday’s Securities Times said 50 brokerages, including CITIC Securities, Haitong Securities and Guotai Junan Securities Co, will provide 100 billion yuan (US$15.7 billion) to the stabilization fund, which will be invested in blue-chip shares.
However, the news didn’t prevent more than 300 stocks hitting the daily-limit decline of 10 percent on the Shanghai and Shenzhen exchanges.
Banks did well in the afternoon with the Industrial and Commercial Bank of China, the world’s biggest lender by assets, rising by the daily limit of 10 percent and the Agricultural Bank of China up 6.7 percent.
“The market hasn’t bottomed out yet as pessimism prevails,” said Wang Fen, an analyst with Shanghai Securities. “Without the support of state funds, it will continue to fall.”
China’s stock markets will be closed today and tomorrow as the country commemorates the 70th anniversary of the end of World War II and victory in the Chinese People’s War of Resistance Against Japanese Aggression.
INDONESIA has delayed naming the winner of a hotly contested race between China and Japan to build the first high-speed railway in Southeast Asia’s biggest economy, a senior government official said yesterday.
US factory activity hit a more than two-year low in August as manufacturers struggled with a strong dollar, weak global demand and the lingering effects of deep spending cuts in the energy sector.
Other data yesterday, however, suggested the economy appeared to be on solid footing, with construction spending rising in July to its highest level since 2008.
The Institute for Supply Management said its national factory activity index fell to 51.1 last month, the lowest reading since May 2013, from 52.7 in July. A reading above 50 indicates expansion in the manufacturing sector.
The index’s decline also likely reflected the recent global equities sell-off, which was triggered by concerns over China’s slowing economy. The ISM’s new orders subindex fell to 51.7, also the lowest level since May 2013, from 56.5 in July.
The employment index slipped to 51.2 last month from 52.7 in July.
Manufacturing, which accounts for 12 percent of the US economy, has been under pressure from the strength of the dollar, which has gained 16.8 percent against the currencies of the US’ main trading partners since June 2014.
A more than 60 percent plunge in crude oil prices since June last year has led to deep spending cuts in the energy sector.
The US dollar fell against a basket of currencies after the data, while US stocks traded sharply lower. Prices for shorter-maturity US government debt rose.
But apart from manufacturing, the economy is thriving. In a separate report, the Commerce Department said construction spending added 0.7 percent to US$1.08 trillion, the highest since May 2008, after a similar gain in June.
Construction spending has risen for eight straight months and was up 13.7 percent compared to July of last year.
The construction spending report rounded off a month of solid data that suggested the economy had retained much of its strength from the second quarter, when it grew 3.7 percent annually. July data for consumer spending, industrial production, business spending, housing and employment painted a fairly upbeat picture of the economy.
Construction spending in July was buoyed by a 1.3 percent jump in private construction spending to the highest level since April 2008. Spending on private non-residential construction projects surged 1.5 percent to the highest level since October 2008.
Spending on private residential construction rose 1.1 percent in July to a near 7-1/2-year high, reflecting gains in home building.
Public construction outlays fell 1 percent. Spending on state and local government projects, which is the largest portion of the public sector segment, fell 1.1 percent.