China stock market is WORST-PERFORMING of 2018 as US trade war takes toll

Chinese stocks have been rattled this year by ongoing trade war tensions with the United States and anxieties surrounding an economic slowdown, with the Shanghai Composite Index ending the trading year down almost 25 percent. The Shanghai Composite Index was 24.6 lower compared to this time last year and its final close of 2017, closing the year at 2,493.90. Elsewhere in China, the Shenzhen composite had dropped 33.25 percent and the Shenzhen component lost around 34.44 percent in 2018. Investors have been keeping concerned eyes on the health of the Chinese economy.

Earlier this year, the Organisation for Economic Cooperation and Development (OECD) warned the US and China could risk sparking a nosedive in global growth if trade war tensions between the two nations escalate.

Trimming its outlook for China, the OECD forecast the country’s growth would slow from 6.6 percent to a 30-year low of 6.0 percent in 2020 in the face of higher US tariffs.

China and the US have been in a trade war for much of 2018, shaking world financial markets as the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies has been disrupted by tariffs.

In further bad news for the second-largest economy in the world, data released today showed manufacturing activity has contracted for the first time in two years.

Despite this, the service sector marked some improvements.

The official Purchasing Managers’ Index (PMI) – the first snapshot of China’s economy each month – fell to 49.4 in December, below the 50-point level that separates growth from contraction, a National Bureau of Statistics (NBS) survey showed.

It was the first contraction since July 2016 and the weakest reading since February 2016.

Analysts had forecast it would dip to 49.9 from 50.0 the previous month.

China is expected to roll out more economic support measures in coming months on top of a raft of initiatives this year.

A prolonged downturn in the factory sector, key for jobs, would likely spark further attempts to juice domestic demand.

In November, industrial output rose the least in nearly three years, while earnings growth at industrial firms fell for the first time in nearly three years.

A PMI sub-index on overall factory output prices fell to 43.3 in December from 46.4, signalling earnings erosion. A gauge on overall production fell to 50.8, the lowest since February, from 51.9.

New orders – an indicator of future activity – continued to soften, reinforcing views that business conditions in China will likely get worse before they get better.

source: express.co.uk