Tencent, SMIC, PetroChina lead stock slide in Hong Kong on weak China data while US delisting risk, Taiwan tensions keep brewing

Data on July industrial production and retail sales came in below consensus estimates while US delisting risk and Taiwan tensions remain in focus

Li Auto and Sunny Optical both retreat before releasing their latest set of results later Monday

2-MIN READ2-MIN

A man walks past a screen displaying the Hang Seng stock index outside Hong Kong Exchanges on July 19, 2022. Photo: Reuters

Published: 9:58am, 15 Aug 2022Updated: 4:37pm, 15 Aug 2022

Stocks weakened in Hong Kong after factory production and retail sales in China trailed market expectations, underscoring a fragile economic recovery amid Covid-19 lockdowns and a housing slump. US delisting risk and cross-strait tensions returned.

The Hang Seng Index dropped 0.7 per cent to 20,040.86 at the close, retreating from a one-week high. The Hang Seng Tech Index swung to a 1 per cent loss from an almost 1 per cent gain, while the Shanghai Composite Index fell less than 0.1 per cent.

Tencent Holdings slid 1.3 per cent to HK$300.40 while chip maker SMIC slumped 6.1 per cent to HK$16.04 and China Merchants Bank slipped 2.2 per cent to HK$40.75. PetroChina, China Life Insurance and China Petroleum & Chemical Corp were also among the worst performers, losing from 2.4 per cent to 3.4 per cent after they opted to delist from the New York Stock Exchange.

Industrial production rose 3.8 per cent in July from a year earlier, while retail sales climbed 2.7 per cent, the statistics bureau said on Monday. The pace slowed from June, and also missed consensus estimates of 4.6 per cent and 5.3 per cent, respectively. Growth in fixed-asset investment slowed.

“China’s economy is struggling, particularly in the property market, which is a big drag on growth,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “You cannot expect a pickup in stocks for the rest of the year, unless the government loosens its pandemic policies aggressively.”

Sentiment remained fragile even after the People’s Bank of China unexpectedly cut interest rates on one-year medium-term lending facilities (MLF) by 10 basis points, the first reduction since January.