Update | Hong Kong stocks slide to pare monthly gain as slowing manufacturing stokes bad loan concern
China’s official purchasing managers’ index for October printed at 51.6, slowing from a five-year high of 52.4 in September
Hong Kong stocks fell for a second day, trimming a monthly advance, on mounting concern that bad loans at Chinese banks will increase after Bank of China reported worse-than-expected earnings growth and official data showed China’s manufacturing activities slowed.
The Hang Seng Index retreated 0.3 per cent, or 90.65 points, at 28,245.54, capping a 2.5 per cent gain in October. The Hang Seng China Enterprises Index, or the H-share gauge, declined 0.5 per cent to 11,507.72. Mainland’s benchmark gauge added 0.1 per cent, rebounding from its biggest decline in 11 weeks, after the central bank injected cash into the financial system.
Equities traded at the negative territory for most of the day as data showed China’s manufacturing industry expanded at a slower pace in October. The manufacturing purchasing managers’ index (PMI) printed at 51.6, the National Bureau of Statistics said on Tuesday. The gauge slowed from a five-year high of 52.4 in September and missed the median estimate of 52 in a Bloomberg poll of economists. A separate PMI released on the same day showed the nation’s service industry also slowed.
The sluggish reading of factory activity may imply a bounce in mainland banks’ non-performing loans, said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi.
“The bad assets held by Chinese banks have been falling since the start of this year, and investors’ fear of the bad loans may come back as manufacturing activities weakened,” said Pang.
The bad assets held by Chinese banks have been falling since the start of this year, and investors’ fear of the bad loans may come back as manufacturing activities weakened