Mainland stocks find more room to sink

Stock markets on the Chinese mainland fell Friday, accompanied by a drop in trading sentiment, as inflationary data failed to dispel uncertainties surrounding the health of the domestic economy.

The Shanghai Composite Index ended the week at 2,069.07 after slumping 2.44 points, or 0.12 percent, on the day; while the Shenzhen Component Index shed 42.71 points, or 0.51 percent, to finish at 8,356.67.

Compared to November 2, the Shanghai Composite and the Shenzhen Component were down 2.27 percent and 3.72 percent respectively by the close of trading Friday.

Both markets started on a down note last week due to contractions in brewing, securities and real estate shares. The markets finished with losses again Tuesday as a lack of trading cues crimped investor sentiment. Declines in the property, brokerage, insurance and banking sectors weighed heavily on markets Wednesday, precipitating another day of retreat. The start of the 18th National Congress of the Communist Party of China in Beijing Thursday took a further toll on sentiment as equity investors held off making any big moves while they waited to see what the event would produce in terms of policy support for the market. A tumble in US and European shares overnight was also credited for Thursday's dive in A-share prices.

Both indices opened lower Friday but advanced after data from the National Bureau of Statistics showed that consumer inflation in China had grown just 1.7 percent in October compared to the same month last year, the slowest pace in 33 months, giving Chinese financial authorities further leeway to ease monetary policy.

Meanwhile, the country's official producer price index (PPI), a gauge of inflation at the wholesale level, fell by 2.8 percent during the same time period, up from a year-on-year drop of 3.6 percent in September. While the data added to signs that the Chinese economy was on the road to recovery, many analysts still voiced concern about worsening conditions in the country's real economy.

The mixed data - combined with drops in securities, auto and oil stocks - pulled both markets into negative territory by the end of trading Friday.

Combined turnover at both mainland markets shrank to 75.5 billion yuan ($12.0 billion), down from 95.9 billion yuan Thursday.

Railway construction stocks stood among Friday's best performers. Jinxi Axle Co Ltd climbed 7.12 percent to 13.54 yuan. China South Locomotive & Rolling Stock Corp Ltd advanced 4.24 percent to 4.67 yuan Friday.

The banking sector also logged a modest victory. Industrial Bank Co tacked on 0.56 percent to 12.58 yuan.

The poor performance seen at A-share markets last week will stay in the minds of investors in the days ahead, minimizing the odds of a near-term rebound, Gui Haoming, chief analyst at Shenyin & Wanguo Securities, warned in a report by the China Business News Saturday.