China’s stocks slumped the most in three weeks as data over the weekend added to concern the economic slowdown is deepening and traders gauged the level of state support for equities.
The Shanghai Composite Index slid 2.7 percent to 3,114.80 at the close, paring earlier declines of 4.7 percent. About 12 stocks fell for each that rose on the gauge, led by technology and consumer companies. The Hang Seng China Enterprises Index added 0.1 percent in Hong Kong.
Industrial output missed economists’ forecasts, while investment in the first eight months increased at the slowest pace since 2000. The Shanghai Composite has tumbled 40 percent from its June high to erase almost $5 trillion in value on mainland bourses as leveraged investors fled amid concerns valuations weren’t justified given dimming growth outlook. China’s government spent 1.5 trillion yuan ($246 billion) trying to shore up its stock market since the rout began three months ago through August, according to Goldman Sachs Group Inc.
“Investors continue to be nervous and are trying to avoid being caught in another correction,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. Government funds appear to be “staying out” of equities to try to discourage investors from relying on interventions, he said.
Industrial output rose 6.1 percent in August from a year earlier, missing the 6.5 percent estimate. Fixed asset investment excluding rural households climbed 10.9 percent in the first eight months versus the 11.2 percent median projection of economists surveyed by Bloomberg. Five interest-rate cuts since November and plans to boost government spending have yet to revive an economy mired in a property slump, overcapacity and factory deflation. More on China Stock Decline….