Alibaba, JD.com, Li Ning lead stock slump before weak China data as central banks eye rate hikes, Swire jumps on asset sale
- Chinese manufacturing probably contracted again in June, economists say, as it may take longer to see the impact of policy easing measures
- Global central banks keep their option for more rate increases, saying policy tightening since March last year may not be restrictive enough to tame inflation
The Hang Seng Index snapped a two-day advance, losing 1.2 per cent to 18,934.36 at the close of Thursday trading. The Tech index slipped 1.7 per cent, while the Shanghai Composite Index weakened 0.2 per cent.
While the Hang Seng Index has risen this month on the back of selective measures to inject more liquidity and ease borrowing costs, the benchmark has lost about 7.2 per cent since March 31, set for its worst quarter since September last year.
China’s PMI Manufacturing Index likely stayed at 49 this month, according to forecasts before a statistics bureau report on Friday. This would be little changed from 48.8 in May and 49.2 in April, signalling persistent weak demand from overseas. A level below 50 means a contraction in activity.
“With such downside risks, as well as the weakness in consumption and the property market, we believe more policy support is warranted to prevent a further slippage in growth,” Bank of America said in a report. “Top decision makers is likely to roll out more easing measures. However, these measures are more likely to be a calibration, rather than a bazooka package in the near term.”
01:49
Premier Li Qiang plays up China’s economic prospects at World Economic Forum’s ‘Summer Davos’
The PMI report will offer a first glimpse into whether the economic recovery has started to broaden its base after recent stimulus, Carlos Casanova, senior economist at UBP said in a note. It might take time to see the impact of easing measures, he added.
Meanwhile, policymakers at the Federal Reserve, Bank of England and the European Central Bank remained concerted in their hawkish message to investors at a forum in Portugal, saying the tightening since March last year may not be restrictive enough to control inflation.
Two stocks debuted on Thursday. Changzhou Shichuang Energy surged 64 per cent to 31.47 yuan in Shanghai, while biotech firm Laekna gained 21 per cent to HK$15 in Hong Kong.
Major Asian markets were mixed. The Nikkei 225 in Japan added 0.1 per cent, the Kospi in South Korea lost 0.6 per cent and the S&P/ASX 200 in Australia was little changed.
