China and Hong Kong stocks closed on Monday lower as two closely watched gauges of China’s factory activity showed the economy is still in contraction territory.
The Shanghai Composite Index lost 1.78 per cent to close at 2,688.85 while the large-cap CSI 300 shed 1.53 per cent to end the day at 2,901.05.
The tech-heavy Shenzhen Composite Index dropped 1.04 per cent to 1,671.91 while the Nadaq-style ChiNext Index edged down 0.07 per cent to 1,992.69
“Chinese manufacturing is shrinking. The trend is consistent with the past two years,” said Francis Lun, chief executive of GEO Securities. “I think it will continue to shrink if the government is doing what it’s planning to do to reduce production, to reduce the capacity of industries with serious oversupply like iron and steel.”
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Shares in China’s mining and steel sectors plummeted after data from the National Bureau of Statistics showed the country’s Purchasing Managers’ Index (PMI) declined to 49.4 in January from 49.7 in December. The result fell short of market expectations. Analysts had forecast a reading of 49.6 in a survey by Reuters.
