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China’s economic growth lost momentum in July as Covid-19 weighed on factory production and consumption. Photo: Reuters
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Hong Kong stocks slide as risk appetite wanes, China’s growth eases amid Covid-19 challenges

  • Hang Seng Index slipped as government reports showed economic activity in mainland China cooled in July, trailing market forecasts
  • BYD, Meituan and Geely Auto led declines as market suffered a third day of setback
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Martin Choi
Martin Choi
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Hong Kong stocks declined amid concerns a resurgence in coronavirus cases in mainland China will dent appetite for risk. Government reports on Monday signalled the Chinese economy lost further growth momentum last month.
The Hang Seng Index fell 0.8 per cent to 26,181.46 at the close of Monday trading, its third day of setback. China’s Shanghai Composite and the CSI 300 were little changed, paring an advance of as much as 0.3 per cent.

Delivery platform operator Meituan dropped 5.1 per cent to HK$221.40. Electronic lens maker Sunny Optical and WeChat owner Tencent Holdings also slid before reporting their interim results to shareholders this week.

China’s economy continues to face an unstable and uneven trajectory, after an outbreak of Delta variant in several provinces triggered more lockdowns and travel curbs. Gains in retail sales and industrial production slowed in July from a year earlier, easing further from June and trailing forecasts by analysts, official reports showed.

“Investors don’t have too high expectations for the earnings results of tech companies, so we can see their stock prices turning weak ahead of the announcement,” said Stanley Chan, director of research at Emperor Securities.

The economy grew by 7.9 per cent in the second quarter from a year earlier, slowing from an 18.3 per cent surge in the first quarter due to base effect. The economy expanded by 12.7 per cent in the first six months.

Elsewhere, BYD slumped 7.2 per cent to HK$253.60 while Geely Auto lost 6.7 per cent to HK$26.55. Car production plunged in the first 10 days this month, the China Association of Automobile Manufacturers said on Monday, a sign that factories may be disrupted by the pandemic or extreme weather.

02:23

Covid-19 returns to China’s Wuhan as Delta variant spreads to 10 provinces

Covid-19 returns to China’s Wuhan as Delta variant spreads to 10 provinces

Sunny Optical slid 2.4 per cent to HK$216.60 before its interim report later on Monday. Its net income is expected to rise 50.9 per cent to 2.58 billion yuan compared to the same period last year, according to analysts tracked by Bloomberg.

Tencent fell 3.5 per cent to HK$453.80 before its earnings report on Wednesday. Its net income for the second quarter of the year is expected to fall 7.8 per cent from a year earlier. The stock also suffered from media commentary lashing out at online games, in yet another stab at tech companies.

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