Hong Kong, China stock markets drop as April economic data throws up a mixed picture of post-coronavirus recovery

Hong Kong and Chinese stocks fell on Friday, with benchmark indexes closing the week lower as China’s April economic data provided a mixed picture of how the world’s second-largest economy is recovering from the fallout of the coronavirus pandemic.

Equities fluctuated between gains and losses throughout most of the day, as traders looked to the data for clues as to whether the post-pandemic recovery in China has been gathering pace. While general readings showed a continuing improvement in economic activity last month, a breakdown of the data pointed to a mixed bag. Industrial production exceeded analysts’ expectations while retail sales trailed projections.

Hong Kong’s Hang Seng Index fell 0.1 per cent to 23,797.47, capping a weekly loss of 1.8 per cent. The Shanghai Composite Index slipped 0.1 per cent to 2,868.46, bringing the week’s loss to 0.9 per cent. Both benchmarks changed directions at least five times on Friday.

Declines in both Hong Kong and China stood in contrast to gains elsewhere in Asia, with the stock benchmarks gaining in Tokyo, Seoul, Taipei, Singapore and Kuala Lumpur.

Melco International Development led declines in Hong Kong after the casino operator swung to a net loss in the first quarter, while Gigadevice Semiconductor rose in Shanghai on optimism about more policy support for China’s home-grown technology companies.

“China’s industrial production data came in better than forecast but consumers are expected to carry the bulk of the heavy lifting during the initial phase of the post-lockdown recovery,” said Stephen Innes, chief global markets strategist at AxiCorp. “Consumer spending beyond China needs to pick up to full tilt. Otherwise, the nascent recovery in industrial output will also start tapering off. The miss on retail sales is providing poor optics, suggesting consumption is falling well short of what was expected to be a pent-up demand rebound.”