China stocks retreat from 2-year high as economic data trail estimates and bond sell-off resumes
October data on industrial output and retail sales released by the National Bureau of Statistics both missed analysts’ estimates, while a broader measure of money supply by the central bank grew at the slowest pace on record
Chinese shares slipped back from a two-year high on Tuesday, as government data showed signs of moderation in the nation’s economic growth and the decline in the country’s 10-year treasuries deepened.
The Shanghai Composite Index retreated 0.5 per cent, or 18.29 points, to 3,429.55 at the close. The benchmark closed Monday at its highest level since December 2015.
The CSI 300 Index of big companies dropped 0.7 per cent and the ChiNext gauge of smaller companies slid 0.5 per cent.
Hong Kong’s equity benchmark, the Hang Seng Index, finished slightly lower after swinging between gains and losses for most of the day.
Trading volumes on the Shanghai exchange were 18 per cent above the 30-day average while those in Shenzhen were 7.5 per cent higher, according to data compiled by Bloomberg.
October data on industrial output and retail sales released by the National Bureau of Statistics both missed analysts’ estimates, while a broader measure of money supply unveiled on Monday after the market closed by the central bank, grew at the slowest pace on record.
There was also sell-off on China’s debt market on Tuesday, triggered by the liquidity concerns, briefly sending the yield on 10-year government bonds above 4 per cent for the first time in three years.
“The market is facing double pressure of weakening economic data and tight liquidity as is indicated from the bond market,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “It looks like it’s taking time out for a breather.”
China’s retail sales rose 10 per cent from a year earlier in October, below economists’ forecasts of 10.5 per cent in a Bloomberg survey, while industrial production expanded 6.2 per cent, trailing the 6.3 per cent estimate. Fixed-asset investment increased 7.3 per cent in the first 10 months of the year, matching expectations.
Industrial and raw-material companies that rely on the strength of the economy for revenues declined. CRRC, the nation’s biggest train maker, dropped 2.9 per cent to 10.62 yuan and Citic Heavy Industries lost 1.9 per cent to 4.77 yuan. Tianqi Lithium Industries also tumbled, by 5.9 per cent to 68.86 yuan.
A gauge of consumer-staples companies, the best-performing sector this year with a gain of 76 per cent through Monday, slid 2.4 per cent.
Liquor maker Jiangsu Yanghe Brewery Joint-Stock slumped 4.4 per cent to 109.99 yuan, paring the stock’s advance to 56 per cent this year. Bigger rival Wuliangye Yibin dropped 3 per cent to 72.19 yuan and Kweichow Mao-tai slid 1.3 per cent from an all-time high to 678.75 yuan.
In Hong Kong, the Hang Seng inched 0.1 per cent lower, or 30.06 points, to 29,152.12. The Hang Seng China Enterprises Index, or the H-share gauge, fell 0.7 per cent.
Q Technology Group dropped 2.7 per cent to HK$17.08 after Nomura downgraded the camera module manufacturer to neutral from buy because of its disappointing October shipments.
Razer, the computer accessories maker for gamers, added 2.4 per cent to HK$4.69, extending an 18 per cent jump during its debut on Monday.
Tencent Holdings, the biggest weighting on the Hang Seng Index, added 0.1 per cent to HK$388, almost completely giving up an intraday gain of as much as 1.7 per cent at one point.
The Chinese technology juggernaut will release its quarterly results on Wednesday. Third-quarter net income is being tipped to have increased 40 per cent from a year earlier, according to the estimate of 11 analysts polled by Bloomberg.