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SSE Composite Index Almost Flat amid No Clarity on More Stimulus

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SSE Composite Index was mostly flat for week ended August 5

The Shanghai Stock Exchange (or SSE) Composite Index was mostly flat for the week ended August 5, 2016. It ended at 2,976.7 as investors lost interest in trading amid a lack of clarity on further stimulus from China. Market participants were also concerned over the likely introduction of tightened rules for wealth management products by China’s banking regulator. It’s doing this to divert capital from China’s stock market and curb shadow banking.

Meanwhile, investors were looking forward to the IPOs (initial public offerings) of nine companies. The new listings include the Bank of Guiyang, the second largest IPO in Shanghai in 2016, with a fundraising target of 4.1 billion yuan.

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China’s manufacturing PMI data were mixed

China’s official manufacturing PMI (Purchasing Managers’ Index) contracted in July to 49.9 from June’s reading of 50. But the China Caixin Manufacturing PMI rose to 50.6 in July from 48.6 in June. This indicates renewed improvement in operating conditions for the first time since February 2015. But the manufacturing sector continues to wait for more stimulus from Beijing.

Investment impact

For the week ended August 5, 2016, mutual funds such as the Oberweis China Opportunities Fund (OBCHX) and the John Hancock Greater China Opportunities Fund Class A (JCOAX) rose 2.6% and 2.3%, respectively. In the same period, the iShares MSCI China ETF (MCHI) rose 1.7%, and the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) fell 0.1%.

The American Depositary Receipts (or ADRs) of China Biologic Products (CBPO), Baidu (BIDU), and Alibaba Group Holding (BABA) rose 12.4%, 4.9%, and 2.6%, respectively, and NetEase (NTES) fell 1.3% for the same period.

In the next part, we’ll look at China’s official manufacturing PMI.

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