China Stocks Tumble Amid Weak Manufacturing Data

China's stocks declined significantly on Thursday following a major spike the previous day. This drop was driven by a private sector survey revealing a contraction in manufacturing activity for July, coupled with a weakening yuan. The Shanghai Composite Index and blue-chip CSI300 Index both saw declines, as did other regional indexes.

On Thursday, Chinese stocks took a nosedive, erasing gains from the previous day's biggest surge in five months. A private sector survey unveiled that China's manufacturing activity shrank in July for the first time in nine months, striking a blow to investor sentiment and weakening the yuan further.

According to the Caixin/S&P Global manufacturing PMI, the index dropped to 49.8 in July from June's 51.8, falling short of analysts' forecasts of 51.5 and marking the lowest reading since October last year. The results largely reflected declines among smaller, export-oriented firms, aligning with Wednesday's official PMI survey indicating a five-month low in manufacturing activity.

At the midday break, the Shanghai Composite Index fell 0.22% to 2,932.14 points, while the blue-chip CSI300 Index dropped 0.57%. Sector-specific indexes painted a similar picture, with the consumer staples sector down 2.2%, the real estate index plummeting 2.25%, and the healthcare sub-index receding 1.03%. Concurrently, Chinese H-shares closed down 0.37% in Hong Kong and the Hang Seng Index declined 0.19% to 17,311.49. The yuan also weakened to 7.2295 per U.S. dollar from the previous close of 7.2265.

(With inputs from agencies.)