Hong Kong and mainland stocks retreat on weak Chinese economic data

China Mobile and Chinese banks led the decline, while mainland developers offered some support, with Country Garden and Sunac at five-year highs

PUBLISHED : Thursday, 14 September, 2017, 9:14am
UPDATED : Thursday, 14 September, 2017, 6:20pm

Hong Kong and mainland stocks retreated for a second day on Thursday, as weak economic data from China triggered a sell off.

The Hang Seng Index fell 0.4 per cent, or 116.88 points, to 27,777.2, while the Hang Seng China Enterprises Index, known as the H-share index, was down 0.8 per cent, or 85.93 points, at 11,101.14.

The decline followed a raft of weaker-than-expected Chinese economic data, as retail sales, manufacturing and investments figures for August all came in below forecasts.

Daily turnover on the Hong Kong bourse was HK$97.1 billion, up 8 per cent from Wednesday.

“Hong Kong’s market has risen to very high levels this year on the back of optimism in China’s economy,” said Linus Yip, chief strategist, First Shanghai Securities. “So investors are selling after today’s poorer-than-expected data.”

But the market sentiment is “not too bad,” considering the Hang Seng Index has been consolidating in the range of 27,500 to 28,000 recently, said Kenny Tang Sing Hing, vice-chairman and executive director of Jun Yang Securities.

“The data is only for one month, and the economy is likely to stay stable before the 19th party congress in October.”

China’s retail sales expanded 10.1 per cent in August from a year earlier, the slowest growth since November and below the average 10.5 per cent predicted by analysts in a Bloomberg survey.

Industrial production increased 6.0 per cent, below expectations of 6.6 per cent, while fixed-asset investment in urban areas rose 7.8 per cent in the first eight months of the year, compared with a forecast of 8.2 per cent.

Index heavyweight China Mobile led the retreat in share prices, dropping 1.7 per cent and taking off 27 points from the Hang Seng Index.

Mainland Chinese banks also declined, with China Construction Bank down 1 per cent, ICBC shedding 0.9 per cent and Bank of China giving up 0.7 per cent.

A rally this week in carmakers came to an abrupt halt. BYD slid 4 per cent, Geely Auto dropped 1.7 per cent and Greatwall Motor fell 1.1 per cent.

Mainland Chinese property developers bucked the downward trend on the back of solid half-year results.

Country Garden rose 5.3 per cent to a five-year high, after rallying 34 per cent in the last month. Sunac China increased 2.8 per cent to an all-time high, and China Overseas was up 1.3 per cent.

Mainland stocks dropped, with the Shanghai Composite Index slipping 0.4 per cent, or 12.72 points, to 3,371.43, while the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – eased 0.3 per cent, or 12.65 points, to 3,829.96.

The Shenzhen Composite Index edged down 0.1 per cent, or 1.45 points, to 1,993.53, while the Nasdaq-style ChiNext dropped 0.5 per cent, or 9.18 points, to 1,879.25.

Trading in other Asian markets was mixed on Thursday. Tokyo’s Nikkei 225 declined 0.3 per cent, while South Korea’s Kospi was up 0.7 per cent. The Sydney All Ordinaries eased 0.1 per cent.