Chinese business sentiment fell sharply in July, suggesting that recent dramatic falls in company share prices had severely dented optimism.
The MNI China Business Indicator fell 8.8 per cent to 48.8 in July, below the 50 score which marks optimism. The reading matches the April level, which was the lowest since January 2009. In June the index had jumped 7.6 per cent in June to 53.5.
MNI, a part of Deutsche Börse Group, surveys 200 companies listed on the Shanghai and Shenzhen stock exchanges. It said the overall fall in sentiment outstripped actual recorded declines in production and new orders, suggesting that other factors were at play. The likeliest is the the steep decline in Chinese stock markets, which wipe some $3tn off the market cap of the two exchanges. The weakening also comes in spite of the recent stimulus measures implemented by the People's Bank of China, the central bank, amid deflationary pressures and rising labour and regulation costs.