Peter Garnry
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Article / 13 June 2016 at 9:54 GMT

China shares slump amid global selloff and poor data

Saxo Capital Markets China
  • Shanghai Composite Index dropped 3.21% to 2833.07
  • Growth Enterprise Market Index slumped by 6.03% to 2054.71
  • All sectors closed in the red except precious metal shares
 China in the red amid global market selloff. Image: iStock

By Jay Luo 

China's stock markets tumbled on Monday amid a global market selloff. The benchmark Shanghai Composite Index dropped 3.21% to 2833.07 and the Growth Enterprise Market Index slumped by 6.03% to 2054.71. All sectors closed in red except precious metal shares.

Shanghai Composite Index, Daily
Shanghai Composite Index, Daily

Source: EastMoney

Market sentiment was undermined during China’s Dragon Boat Festival holiday as overseas stock markets slumped and the offshore Chinese yuan reached a four-month low versus US dollar.

Growth Enterprise Maket Index, Daily
Growth Enterprise Market Index, Daily

Source: EastMoney

At the same time, China official data released on Monday showed China's fixed-asset investment growth eased to 9.6% year-on-year in the January-May period, the lowest level since May of 2000 and well below the market expectation of a 10.5% rise.

The growth rate of private fixed-asset investment dropped sharply to 3.9% in January-May period. The poor data indicates that economic growth is out of steam and one of the reasons is that oversupply depressed corporate profit margins.

Slowing growth rate of fixed assets investment in China

China fixed assets investment

Data released on Monday also showed China’s value-added industrial output rose 6.0% in May from a year earlier, the same as the previous month and in line with market expectation. Retail sales grew by 10.0% in May compared with a year earlier, down from a 10.1% increase in April.
Another factor for China stock market slump is that lock-up shares worth 262 billion yuan will become eligible for trade in June, a 37.74% rise compared with May.

Some investors also attributed to the selloff to European Cup in football as China shares usually perform badly during major sports events.

In general, the market is now at a delicate stage as investors nervously wait for the decision by MSCI on A-shares’ inclusion into MSCI emerging market index, as well as the decision of the Federal Reserve on interest rates.

— Edited by Clare MacCarthy
Jay Luo is an editor and analyst at Saxo Capital Markets in China
Tepord Tepord
It was designed by the former Chief Designer of Isuzu’s commercial truck division, Steve Jennes, who is now Chief Designer at Nikola Motor.

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Tepord Tepord
A possible silver lining for Lit Motors, the Silicon Valley-based startup is promising much better specs than its Chinese counterpart. Lit is talking about ~150 miles (241 km) of range on a 10 kWh battery pack, while Lingyun listed the range of its concept at 62 miles (100 km) on a 3 kWh battery pack.

Lit also beats Lingyun on the estimated top speed with ~100 mph (160 km/h) versus ~62 mph (100 km/h). The Chinese startup didn’t disclose any pricing information, but Lit expects the first generation to go on sale for about $24,000.


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