Hong Kong and China stocks lose ground as investors worry over economic outlook
- Markets’ recent momentum could slow as latest data adds to trade war uncertainty, analyst says
- China and Hong Kong stocks seen as outperformers relative to US markets
Hong Kong and China stocks closed lower on Wednesday as uncertainties over the mainland’s economic outlook resurfaced.
The Hang Seng Index fell 113.42 points, or 0.39 per cent, narrowing morning losses to close at 28,807.45.
In the mainland, the ChiNext Index, which tracks smaller companies listed on the Shenzhen Stock Exchange’s tech board, was the biggest decliner among Chinese benchmarks, dropping 4.49 per cent, or 79.57 points, to 1,693.86.
The Shanghai Composite Index was down 1.09 per cent, or 33.36 points at 3,026.95.
The benchmark has risen 21 per cent thus far this year, helped by the quadrupling of weightings of Chinese stocks into MSCI global benchmarks compiler earlier this month, one analyst said.
Traders said uncertainty surrounding the slowdown in the mainland’s economic growth, which has been compounded by the uncertain outcome of the US-China trade negotiations, could slow down the markets’ momentum seen in the previous two months.
“The recent economic data released in China over the past two months has not been entirely rosy, and yet investors have largely shrugged this off and continued to chase up the market,” said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi. “I don’t see these uncertainties going away in the short term. The key point is that there has been too much bullishness in the market.”
Last week, Beijing reported worse-than-expected trade data for February, as both dollar-denominated exports and imports missed economists’ forecasts, falling 20.7 per cent and 5.2 per cent, respectively from a year ago.
An amazing turnaround in fortunes as China’s stock market goes from the world’s worst to best in a matter of months
Investors were also looking to the release of industrial production, retail sales and fixed-asset investment data for January and February today by the National Bureau of Statistics, which will provide a clearer picture of the health of the economy.
However, other analysts noted there were optimistic signs for the local and mainland markets, given their recent strong performances.
“If we look at the sell-off in the Dow Jones Industrial Average between October and December, which also triggered declines in other global benchmarks during the same period, the Shanghai and Hong Kong benchmarks are the only two that had been able to recover all the lost ground during this period,” said Linus Yip Sheung-chi, chief strategist for First Shanghai Securities.
“While there are clear signs of the Chinese economy slowing down, as long as the government continues to introduce tax cuts and other economic stimulus support, foreign investors will continue to buy A shares and Hong Kong stocks as their preferred bets relative to other markets.”
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An amazing turnaround in fortunes as China’s stock market goes from the world’s worst to best in a matter of months
“While there are clear signs of the Chinese economy slowing down, as long as the government continues to introduce tax cuts and other economic stimulus support, foreign investors will continue to buy A shares and Hong Kong stocks as their preferred bets relative to other markets.”
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In Hong Kong on Wednesday, Ping An Insurance bucked the downward trend, gaining 1.45 per cent to HK$83.90 after the company reported a 20.6 per cent jump in net profit to 107.4 billion yuan (HK$125.6 billion), beating consensus expectations of 97.48 billion yuan in a Bloomberg poll.
It was the most traded stock yesterday, with HK$5.95 billion worth changing hands.
Elsewhere, Tencent Holdings eased 0.72 per cent to HK$358.40, and HSBC Holdings was down 0.77 per cent at HK$63.35.
Shares of Lai Sun Development rose 0.32 per cent to HK$12.72 after the Lands Department said the company had won a government tender for a small residential site in Yuen Long for HK$209.8 million.
Lai Sun said it planned to build a residential block with 150 units of 280 sq ft to 300 sq ft on the site. The winning bid represented HK$4,977 per square foot, in line with market expectations.
In Shanghai, shares in People’s Insurance Company of China were lower after the Ministry of Finance said it had transferred a 6.8 per cent stake in the firm to the state pension fund as part of its move to plug the country’s pension shortfall.
The company’s Shanghai shares were down 5.26 per cent to 10.09 yuan and in Hong Kong they fell 1.4 per cent to HK$3.51.
