Disappointing PMI weighs on A-shares

Stock markets on the Chinese mainland closed deep within negative territory Thursday after manufacturing activity in the world's second largest economy showed unexpected signs of weakness.

The benchmark Shanghai Composite Index finished trading at 2,275.67 after shaving off 1.16 percent, or 26.73 points; while the Shenzhen Component Index dived 1.48 percent, or 139.38 points, to close at 9,265.68.

Combined trading volume at the two exchanges settled at 235 billion yuan ($38.3 billion) for the day, down from Wednesday's 254 billion yuan.

A-shares contracted after HSBC's preliminary purchasing managers' index (PMI) slipped to a seven-month low of 49.6 in May, down from an official reading of 50.4 in April. Several media outlets mentioned a reading of 50.4 as the consensus figure expected by analysts. Pessimism surrounding the unimpressive PMI spread to other Asian markets; with Japan's Nikkei Average tumbling 7.3 percent Thursday, the benchmark's biggest single-day drop in over two years.

Property developers and several topical sectors defied the downward pressure within the broader market. Financial and nonferrous metals stocks though were not as fortunate.

Securities shares wilted on anxieties that decelerating factory output would erode confidence in the capital market. Haitong Securities Co slipped 2.19 percent to 11.14 yuan.

Coal stocks also roundly declined. Henan Dayou Energy Co surrendered 3.67 percent to 23.12 yuan.

Meanwhile, equities related to satellite and navigation were launched into orbit after China signed a cooperation agreement with Pakistan allowing the latter to use its Beidou navigation system. Beijing BDStar Navigation Co surged 7.63 percent to 42.89 yuan. China Spacesat Co jumped 7.38 percent to 19.05 yuan.