Hong Kong stocks suffer 8.5% slide in August as Chinese manufacturing slump, property debt woes rattle investors

China’s PMI manufacturing index remained below the 50-point threshold for a fifth month in August, the statistics bureau reported on Thursday

The Hang Seng Index has lost 8.5 per cent in August, the first monthly setback since May and the most since February, following an exodus of foreign funds

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The Hang Seng Index shown on an electronic board outside a bank branch in Mong Kok. Photo: Dickson Lee

Published: 10:48am, 31 Aug 2023Updated: 4:57pm, 31 Aug 2023

Hong Kong stocks declined, adding to the biggest monthly loss since February, after a government report showed a slump in manufacturing activity persisted in August and debt woes at developer Country Garden Holdings hurt sentiment.

The Hang Seng Index fell 0.6 per cent to 18,382.06 at the close of Thursday trading, retreating from near a two-week high. The index slumped 8.5 per cent in August, the most since a 9.4 per cent sell-off in Feburary. The Tech Index dropped 0.4 per cent and the Shanghai Composite Index retreated 0.6 per cent.

Developers Longfor Group slumped 4.7 per cent to HK$16.52 and China Resources Land lost 2.2 per cent to HK$33.15. Bank of China slipped 1.5 per cent to HK$2.66 after first-half earnings at the nation’s third-largest lender missed consensus estimates. Alibaba Group Holding slipped 0.2 per cent to HK$90.20 and Tencent Holdings lost 0.3 per cent to HK$325.

Limiting losses, China Mengniu Dairy rallied 5.6 per cent to HK$26.40 on the back of fatter operating margins in the first half. Baidu jumped 2.1 per cent to HK$139.40 after opening its ChatGPT-like ErnieBot for public use.

This month’s setback kept the city’s benchmark stock index at 7.1 per cent loss since the start of the year, making it the worst performer among major world indices and wiping out US$268 billion in market value from its 80 blue-chip members.

China’s official PMI manufacturing index rose to 49.7 in August from 49.3 in July, the statistics bureau said on Thursday, coming above market expectations of 49.4. Still, it marked a fifth straight month of contraction as the reading stayed below the 50-point threshold.