China Market May Struggle as Data Cast Mixed Picture

Macro factors are likely to dominate the trading theme in the Chinese market Monday, after data out on the weekend painted a mixed picture of the economy.

Jin Mao Tower and the Shanghai World Financial Center, in Shanghai.
Kohls Kohls|F1online RM|Getty Images
Jin Mao Tower and the Shanghai World Financial Center, in Shanghai.

The benchmark Shanghai Composite slipped 0.51 percent on Friday to end at 2281.45, its third day of losses.

Market Factors:

China issued May economic data on Saturday that showed falling inflation, weak industrial production, slowing investment growth. But trade numbers released on Sunday told a more optimistic scenario, with both imports and exports growth beating expectations.

Stocks to Watch:

Refiners' Shares, Transport Plays - China cut fuel prices by 6 percent from Saturday to align with changes in global crude prices. It's the biggest price cut in three years and the second cut this year. Analysts estimate the move will drag the June Consumer Price Index down by 0.14 percent.

Banking Stocks - The six largest banks in the country have lifted deposit rates to 110 percent of the benchmark rate after China widened the floating range for deposit and lending rates. Smaller lenders have yet to pass on the rate adjustment. Banking shares suffered losses on Friday, as the floating range adjustment may narrow their net interest margins.

Utilities Stocks - The People's Daily reports that most Chinese cities are likely to increase the minimum threshold for a progressive tariffs system that will charge steeper tariffs for high users.

—By Cheng Lei, CNBC Asia Pacific