Shares across Asia tumbled Monday, the first trading day of the year, after the latest signal that China’s economy is stalling. The Shanghai Composite Index fell 3.4%, the smaller Shenzhen Composite is down 4.5% and Hong Kong’s Hang Seng Index fell 2.1%. Japan’s Nikkei Stock Average was down 2.6% while South Korea’s Kospi was down 1.6%.
Markets around the world were closed Friday for the New Year’s holiday.
China shares are lower on the first trading day of 2016. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
The losses in the region deepened after a private gauge of Chinese manufacturing activity continued to weaken. The Caixin China manufacturing purchasing managers index fell to 48.2 in December from 48.6 the previous month. A figure under 50 indicates contraction.
“I think this will raise expectations of more government action to support the economy,” wrote Andrew Sullivan, managing director at Haitong International Securities, in a note, adding that manufacturers continued to trim their staff numbers.
China’s manufacturing sector remains plagued by overcapacity, falling prices and weak demand. While an official gauge of Chinese manufacturing, released Friday, edged up to 49.7 in December from 49.6 a month earlier, signaling a slight gain in momentum, the figure indicates factory activity is continuing to contract.
As nearly everyone knows China is one of investors' major concern going into the new year. So the above is not the auspicious kick off to 2016 many we're hoping to see. Yes, it's early and it's only one indicator, but perception, not old men, rule.
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