Stocks drop amid weak economic data

Shanghai shares dropped on Friday as investors became cautious amid weaker-than-expected economic data.

The Shanghai Composite Index fell 1.37 percent to close at 2,682.39 points.

Shares of banking, brokerage and automobile companies were among the biggest decliners on Friday. The banking sector declined 1.54 percent and the automobile sector retreated 1.25 percent respectively, according to Chinese financial data provider Wind Information Co.

Market sentiment dimmed after the National Bureau of Statistics said on Friday that China’s Producer Price Index rose 0.1 percent year on year in January, the weakest pace since September of 2016.

The National Bureau of Statistics also said that the Consumer Price Index, a main gauge of inflation, rose 1.7 percent in January year on year, which is slower than the 1.9 percent increase in December.

Zhang Yiping, analyst from China Merchants Securities Co Ltd, wrote in a note that “CPI data in January met market expectation, which is due to consumer demand during the Chinese New Year holiday — PPI data is below market expectation, which is the main reason for the price declining in the petrochemical industry.” 

Wan Zhe, chief economist of China National Gold Group, said that “from the CPI and PPI data, we can see that overall economic environment is relatively weak — the government will take measures in fiscal and monetary policy and we will see the improvements later this year.”

Huayu Automotive Systems Co Ltd dropped 6.08 percent to 19.45 yuan (US$2.87) and Citic Securities Co Ltd fell 3.42 percent to 18.64 yuan.