Shanghai Down Nearly Four Percent to Kick Off 2016


Mainland Chinese stocks led the Asian and Pacific Rim stocks lower today after weak economic data cast a shadow of doubt over China’s economic recovery.

TheShanghai Composite was down nearly 3.94 percent while theShenzhen lost nearly 5.3 percent. Stocks throughout the region from Australia, South Korea, Japan and India were also in the red.

Energy company stocks bucked the downtrend as prices in oil were up in early Asian trading hours.

Mixed Yearly Results for the US Indices

The major US indices were mixed for 2015. TheDow Jones and theS&P 500 each saw its worst performance since 2008. TheNasdaq Composite was up for 2015. The S&P 500 lost 0.73 percent for 2015 and the Dow Jones was down 2.23 percent for the year. The Nasdaq Composite was up 5.5 percent in 2015 thanks to bio techs and other major technology names. Shares inApple disappointed for 2015.

The Chinese markets, like theShanghai Composite were down nearly 175 points, or 3.94 percent, at the time of this report. The Shenzhen lost nearly 5 percent today and theHang Seng was down nearly 2.7 percent.

China’s PMI Weakens Again

Chinese markets sold off for several reasons. The weak manufacturing report and the earlier Caixin PMI survey did not help. We are also seeing restricting of the economy which is not helping industrial production. Everyone is still focused on the industrial production side of the equation. This prompted the weakness this morning.

China’s official PMI index came in at 49.7 for December. This is below the contraction level and below the figure of 49.8 in November. The non-manufacturing PMI was up to 54.4 from the print of 53.6 in November. Please remember that any number below 50 is contraction.

The Caixin December manufacturing PMI was at 48.2. This was below the print of 48.6 in November. The Caixin is closely watched as it reports smaller and mid-sized industrial firms. This is a niche not covered in the official PMI release above.

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