– This is the script of CNBC's news report for China's CCTV on January 4, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
In 2015, Japan's Nikkei 225 and China's Shanghai were both winners of the year.
However, in the new year, there's old fear.
Chinese stocks plunged Monday, spurring a trading halt for the rest of the session, and leading stock markets in Asia Pacific lower after feeble manufacturing surveys revived concerns over the slowdown of the mainland's economy.
Gavin Parry, managing director at Parry International Trading, said several factors could explain the sell-off in the Chinese markets. First, he noted the manufacturing report that was out over the weekend, followed by the lower-than-expected Caixin survey released earlier in the morning.
The geopolitical situation in the Middle East is also a point of concern for market watchers. Parry said China has sizable investment in Iran's oil industry. The escalation of tension between Iran and Saudi Arabia will likely weigh on expectations.
Lastly, hawkish comments from Federal Reserve heads stateside are likely to weigh on investor confidence as markets continue to anticipate the pace of interest rate hikes from the Fed this year.
[Ken Peng, Citi Private Bank Investment Strategist ] "13:53:02 investors are kind of spooked by this circuit breaker mechanism. its untested, its new and i think markets really didnt expect it to be tested on the first day of trading. it happened for 15 mins just as afternoon session began and when markets came back, people were really panicking about not having much to sell afterwards. so you saw a decline after the circuit breaker resumed. this is a key problem but as markets get more used to the circuit breaker, there should be less panic. 13:53:48"
China's official manufacturing Purchasing Managers' Index (PMI), a measure of factory activity, stood at 49.7 in December, in line with market expectations.
On the other hand, the official non-manufacturing PMI was up 54.4, from November's reading of 53.6. A reading below 50 indicates a contraction in activity on a monthly basis. Analysts are expecting more stimulus from China's Central Bank.
[EDDIE (t)TAM ,Central Asset Investments CEO & CIO ] "114915 The US rate decission also affects Chinese monetary policies. And recently, we have seen obviously divergence between the two. You know, last year China cut rates by 6 times and as a result, we have seen increasing pressure on the reminbi. 114930 114951 My fear is that if this continue, the strong outflow of capital, this may even affect the overseas acquisitions. 114958 "
[K0UMAR PALGHAT, Kapstream Managing Director ] "The biggest challenge for 2016 for China, is going to be how much stimulus do they need, and are there bubbles forming in the property sector, or if that cheap money will feed the wage inflation. 063421 "
Consumer staples and services, health care, software and auto stocks are Henderson Global Investors' top Chinese stock picks for 2016 - but don't get your hopes up for a hearty dividend.
Charlie Awdry, China portfolio manager at the asset management company, told CNBC that investors should take a discriminating approach to investing in the benchmark Shanghai Composite, the Hong Kong Hang Seng or U.S.-listed American Deposit Receipts (ADRs) for Chinese stocks.
Awdry described the auto space as "one manufacturing sector in China doing relatively well."
He advised, however, against investing in Chinese banks.
"I think 2016 will be the first year where we really see whether they get their dirty laundry out, cut profit numbers and cut the dividend. We don't currently own Chinese banks. I'm pretty cynical about that, but I think (they are) a controversial source of yield in the Chinese market," Awdry said.
CNBC's Qian Chen, reporting from Singapore.
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Oil Sots:
[Kamran Bokhari ,University of Ottawa Senior Lecturer] "08:33:33 i think both sides are gearing up for escalation, and we're gonna see more and escalation as we move forward. the ball is in the iranian court as we move forward to retaliate especially after the snapping of diplomatic ties and i suspect that we may see something go down in lebenon, yemen, or iraq. 08:33:53"
[NEIL BEVERIDGE, Bernstein, Senior Oil and Gas Analyst ] "08:42:54 certainly not something that was anticipated at th e start of the year but as certainly the supply disruption. if you look at saudi arabia, much o fit comes from the eastern province which is the shia dominated province and this is the area which could potentially suffer if there is an escalation of tension between saudi arabia and iran. 08:43:18"
[JUERG KIENER ,Swiss Asia Capital, Singapore, MD&CIO] "130906 i think its not just an iranian issue, its a middle east issue, theres similar activities in yemen where the saudis are the culprit of the issue, the whole middle east taking sides fromt hat point if you were, the risk premium is incredibly the low, ive never seen geopolitcal relations like weve seent hem todaya nd the oil price has hardly moved form the bottom. 130930"
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