Stocks in Asia declined due to concerns over the growth of China as the manufacturing growth in China is less than what was anticipated for the month of May.
The Purchasing Managers’ Index (PMI) fell to 53.9 from 55.7 in April. The Purchasing Managers’ Index is an indicator of economic activity. A PMI above 50 is an indicator of economic growth whereas a PMI below 50 is an indicator of reduction in economic activity.
The Shanghai Composite Index fell by 1.93 percent to 2542.09. Slower economic growth may stop China from raising benchmark interest rates or letting the yuan appreciate against the dollar.
The Shanghai Composite Index fell by about 9.7 percent in May, 2010 due to concerns over the worsening European debt crisis and the government’s property measures.
The central bank one-year lending rate is 5.31 percent and the deposit rate at 2.25 percent since December 2008. The yuan is trading at about 6.83 per dollar under a policy in place since July 2008 to aid exporters.
The fall in the PMI might be an early indication of a slowdown in China. The Chinese Government measures for reducing the speculation in property market has resulted in reduction in property trade. The drop in Euro may also intensify the slowdown in China.
No comments:
Post a Comment