China could emerge as next market spoiler, here's why

NEW DELHI: China could emerge as the next market spoiler, as deflation sets in slowdown worsens in the world's second largest economy, Nizam Idris of Macquarie said.

"If China were to lose control on the slowdown, then it will have more wider impact across Asia. Market is probably too sanguine on China as of now," Idris said.

Chinese factory activity contracted for a third month in May and output shrank at the fastest rate in just over a year, a private survey showed, indicating persistent weakness in the world's second-largest economy that requires increased policy support.

"The subdued flash PMI print suggests there is no clear sign of near-term stabilisation in the economy. Risks to the outlook remain to the downside," Barclays economist Shengzu Wang said in a research note.