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China stocks dip as investors take profit amid economic worry

Wednesday, June 1, 2016 - 15:25
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[SHANGHAI] China stocks dipped on Wednesday following the previous day's sharp rally, as growing optimism about MSCI adding mainland stocks to its emerging markets index was offset by worries over China's economy and a looming US rate hike.

The blue-chip CSI300 index fell 0.3 per cent, to 3,160.55, while the Shanghai Composite Index dipped 0.1 per cent, to 2,913.51 points.

There was little market reaction to the official and private surveys on China's manufacturing activity, which were roughly in line with expectations, underlining doubts that the world's second-largest economy is picking up.

Some investors took profit from Tuesday's more than 3 per cent surge in China's shares, which was underpinned by expectations that US market index provider MSCI could add mainland stocks to its emerging market benchmark for the first time.

David Dai, Shanghai-based investor director at Nanhai Fund Management Co, said any market rally was unlikely to be sustained. "The economy is still weak, and the Fed will likely raise rates soon. I don't think the market will go up much further. The best strategy now is to take profit."

Financial firms dropped following Tuesday's jump, offsetting gains in the material and energy sectors.

REUTERS