Shares slip at midday as PMI contracts

   Date:2012-04-23

SHANGHAI stocks retreated in the morning session after a purchasing manager's index contracted for the sixth straight month.

The Shanghai Composite Index lost 0.17 percent, or 4.14 points to 2,402.72, with a turnover of 61.5 billion yuan (US$9.7 billion) by the noon break.

The HSBC China PMI, a gauge of manufacturing activities in the country, stood at 49.1 in April, up from 48.3 in March, said HSBC and Markit Economics today. A number below 50 indicates a contraction in manufacturing.

"The initial PMI reading rebounded in April, reflecting the effectiveness of previous policy loosening," said Qu Hongbin, a chief economist at HSBC. "So worries about a sharp downturn in economic growth are damped. Supply and demand grew at the slowest pace in recorded history, and the job market is also under pressure. So the government will likely further ease monetary and fiscal policies in the second quarter."

Analysts estimated slower profit growth among lenders this year compared to 2011. They estimated an average increase of 19 percent in net incomes in the first quarter. Lenders' net interest margin might edge up a bit, while commissions and fee incomes drop.

Lenders lost 0.3 percent on average by the noon break. Industrial and Commercial Bank of China, the nation's biggest lender, fell 0.2 percent to 4.41 yuan. Bank of Communications, the fifth-biggest lender, retreated ahead of the announcement of its first quarter earnings tonight, by 0.4 percent to 4.83 yuan. Bank of China dropped 0.3 percent to 3.05 yuan.

"The bottom dropped out of the growth of the economy," said Aijian Securities in a note today. "The market will climb with improving liquidity in the short run."

 


 

Source:shanghaidaily

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