Shanghai: Stocks down 4.27% on weak manufacturing data

[SHANGHAI] Shanghai stocks closed down 4.27 per cent on Friday after a gauge of manufacturing activity tumbled to its lowest in more than six years, showing more weakness in the world's second-largest economy, dealers said.

China's benchmark Shanghai Composite Index plunged 156.55 points to 3,507.74 on turnover of 450.6 billion yuan (US$70.6 billion) but managed to end just above the key 3,500 point level.

The Shanghai index lost 11.54 per cent for the week on worries over the flagging economy, a surprise currency devaluation last week and the possibility of weaker government support for the market.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, slumped 5.39 per cent, or 116.09 points, to 2,039.40 on turnover of 418.8 billion yuan. It fell 11.73 per cent over the week.

The preliminary reading of Caixin's Purchasing Managers' Index (PMI) came in at 47.1 in August, falling from July's final reading of 47.8 and the worst since March 2009.

"The weak PMI figure released today weighed on market sentiment as investors are concerned about the weakening economic performance," Zheshang Securities analyst Zhang Yanbing told AFP.

Chinese shares have been extremely volatile in recent weeks, plunging almost a third from June, after having risen over 150 per cent in the preceding 12 months.

Following the market collapse, Beijing intervened with a rescue package that included funding the state-backed China Securities Finance Corp. (CSF) to buy stocks on behalf of the government and barring major shareholders from selling their stakes.

AFP