Hong Kong stocks fall to 2-week low as slumping Chinese exports point to further slowdown in growth

The Hang Seng Index fell 1.8 per cent to 19,184.17 at the close, the lowest level since July 24. The Hang Seng Tech Index dropped 2.8 per cent and the Shanghai Composite Index slipped 0.3 per cent.

Country Garden Holdings led the decline among Chinese property developers after Reuters reported that it missed interest payments on two US bonds totalling US$22.5 million. Drug makers extended falls spurred by a widening campaign to eradicate corruption in the industry.

Chinese exports dropped 14.5 per cent year on year in July, the steepest monthly fall since February 2020, a report from the Customs department showed. The figure was lower than the consensus estimate of a 13.2 per cent decrease and a 12.4 per cent drop the previous month. Imports fell 12.4 per cent against projections of a 5.6 per cent decline. A report due Wednesday may also show that both consumer and producer prices were in deflationary territory last month.

“These readings point to worsening growth prospects. A worsening export contraction means weaker production, while rapidly deteriorating imports reflects weaker demand within China,” said Lu Ting, chief China economist at Nomura Holdings in Hong Kong. “Markets appeared to have become too bullish over the past couple of weeks by overestimating Beijing’s policy support and underestimating the downward pressures.”

Sentiment on risk assets remained skittish as traders are keeping a close watch on the follow-through measures after a Politburo meeting chaired by President Xi Jinping pledged to reinvigorate growth last month.