Hong Kong stocks continue slide as more disappointing economic data, property crisis weigh on sentiment

Most members of the Hang Seng Index decline after data on China’s credit growth and loans fall short of expectations
Official reports on industrial output, retail sales and fixed-assets investment, due on Tuesday, are also likely to show China’s economy struggling

Hong Kong stock market

Jiaxing Li

Published: 10:30am, 14 Aug 2023

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Hong Kong stocks slid as the latest economic data from mainland China gave investors more cause to doubt a rebound in growth and the property crisis continued to weigh on sentiment.

The Hang Seng Index dropped 1.6 per cent to 18,773.55 at the close of Monday trading, near a three-week low. The tech index slipped 1.5 per cent while the Shanghai Composite Index declined 0.3 per cent.

Almost all 80 index members declined. Alibaba Group lost 2.6 per cent to HK$92.80, rival JD.com tumbled 1.3 per cent to HK$144.20 and Tencent Holdings declined 0.8 per cent to HK$333.20. EV maker BYD tumbled 6.2 per cent to HK$238.60, while Macau casino operator Sands China slid 1.4 per cent to HK$28.20.

Embattled property giant Country Garden crashed 18.4 per cent to HK$0.80, a historical low, as investors continue to sell the company’s shares amid fears of a debt restructuring. Country Garden Real Estate Group is suspending trading of 11 of its onshore bonds from Monday, according to the Shenzhen Stock Exchange.

Also on Monday, state-backed Developer Sino-Ocean suspended trading of 6 per cent guaranteed notes due in 2024 due to non-payment of US$20.94 million in interest. The company’s shares lost 5.1 per cent to HK$0.37.

China’s credit growth in July came in well below market expectations, with new aggregate financing standing at 528 billion yuan (US$72.8 billion), less than half of consensus expectations. Meanwhile, loans to the real economy plummeted to 36.4 billion yuan, the lowest since 2006, according to Goldman Sachs.

“In addition to lacklustre economic data, a long-simmering threat to economic and financial stability, the intersection of weak property market prices and a mountain of debt in the sector is causing considerable concern,” analysts at DBS Group Research wrote in a note on Sunday. Decisive, targeted measures to restructure the property sector are much needed for sentiments to bottom, they added.

The Hang Seng Index has slumped for two weeks amid property woes spurred by Country Garden and slowdown concerns. Investors have started to question whether Beijing’s stimulus can help the market to turn the corner amid mounting downward pressure.

Official data due on Tuesday is also likely to show China’s economy struggling. Industrial output, retail sales and fixed-assets investment are all expected to post only marginal growth, Bloomberg data showed.

Major Asian markets traded lower on Monday. The Nikkei 225 in Japan declined 1.3 per cent, and the S&P/ASX 200 in Australia lost 0.9 per cent. The Kospi in South Korea declined 0.8 per cent.