SHANGHAI: China stocks edged lower on Friday after data showed the country’s annual factory gate inflation remained uncomfortably high and underlined growing strains on the economy.
Major indexes barely moved for the week as Beijing’s surprise hint at monetary easing earlier this week failed to provide support and raised worries over the country’s economic recovery.
The blue-chip CSI300 index fell 0.4% to 5,069.44, while the Shanghai Composite Index ended flat at 3,524.09.
The CSI300 shed 0.2% for the week, while SSEC gained 0.2%.
Tech stocks shined this week, with Shanghai’s STAR50 index posting its ninth week of gains.
China’s factory gate inflation eased in June, but the annual rate stayed high. The persistently high inflationary pressures in the industrial sector prompted China’s cabinet this week to flag potential policy easing measures.
China’s cabinet said on Wednesday it would use timely cuts in the bank reserve requirement ratio (RRR) to support the real economy, especially small firms.
However, analysts said the hints did not point to a turnaround in monetary policy and added that it raised worries that the economic recovery was weaker than expected.
Investors should pay close attention to potential risks as the market now faces changes, including risks from some of China’s real estate debts and the US Fed’s taper talk, Huaan Securities said in a note.
The brokerage recommended sectors with robust earnings growth in the first half, including semiconductor, new energy vehicles-related firms and sectors with low valuations.
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