China stocks drop most in month as weak economic growth sinks in | Fin24
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China stocks drop most in month as weak economic growth sinks in

Oct 18 2019 13:06
Magdalene Fung and Amanda Wang

Chinese stocks dropped the most in a month on Friday after worsening economic data dimmed the outlook for corporate earnings.

The Shanghai Composite Index fell 1.3%, nearing its 100-day moving average that’s supported the gauge for most of the past six weeks. Data showed China’s gross domestic product rose 6% in the July-September period from a year ago, the slowest pace since the early 1990s and weaker than the consensus forecast of 6.1%.

The poor data follows a series of profit warnings from Chinese companies in recent weeks. About 44% of more than 1 200 firms that have given profit guidance for the third quarter predicted worse earnings than from a year earlier, in terms of smaller profits, deeper losses or swings into loss.

“People remain concerned about the health of the economy,” said Gu Yongtao, a strategist with Cinda Securities Co. “They will now need to trim down their expectations for economic growth as well as stock market performance.”

The benchmark Shanghai index has fallen for four straight days, the longest streak since August 7, following a rally at the start of the week. Stocks gained 1.2% on Monday after the Trump administration said Beijing and Washington had made progress on trade.

Foreigners net sold 1.2 billion yuan ($170m) of mainland-listed equities via the exchange links with Hong Kong, snapping a six-day buying streak, according to data compiled by Bloomberg.



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