Hong Kong stocks reach one-week high as China injects US$17 billion into slowing economy while Alibaba, Tencent power tech gains

Government reports signal a slowdown in China’s economic activity last quarter, while the central bank injects US$17 billion into the system

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People wearing face masks walk at a main shopping area in Shanghai. Stocks closed higher, aided by China’s US$17 billion liquidity injection. Photo: Reuters

Published: 9:52am, 15 Jul 2021Updated: 4:55pm, 15 Jul 2021

Hong Kong stocks rose to a one-week high as China injected liquidity to ease a crunch in the system amid reports showing the economy lost some growth momentum last quarter.

The Hang Seng Index gained 0.8 per cent to 27,996.27 at the close of Thursday trading, the highest level since July 6. The Hang Seng Tech Index was little changed while the Shanghai Composite Index added 1 per cent.

Banks led winners in the city after the People’s Bank of China unleashed a combined 110 billion yuan (US$17 billion) of liquidity through open-market operations and a cut in the reserve requirement ratio that kicked in on Thursday. Alibaba Group Holding and Tencent Holdings advanced more than 2 per cent.

China’s economy grew 7.9 per cent last quarter from a year earlier, versus 18.3 per cent in the preceding three months, the National Bureau of Statistics said on Thursday morning. That was below the estimate of 8 per cent growth in a Bloomberg survey of economists. Industrial production and retail sales for June also slowed, though they outperformed market consensus.

Major indicators are pointing to “normalising but still resilient domestic demand in June, particularly in consumption,” said Zhu Chaoping, a strategist at JPMorgan Asset Management in Shanghai, in a note to clients. “Overall, China’s economy looks to be on track for recovery, with the 6 per cent annual growth goal in reach. However, downside and structural risks in domestic demand are concerning.”