Hong Kong Stocks Hit 3-Week Low as China Inflation Data Fuels Worries About Growth
Hong Kong stocks hit a three-week low after disappointing inflation data from the mainland reinforced concerns about growth prospects, while Citi joined other Wall Street banks in snubbing Chinese stocks.
The Hang Seng Index was down 1.7 per cent at 17,147.98 as of 10:10am local time, the largest single-day retreat in five weeks, bringing the index to a three-week low. The Tech Index declined 1.5 per cent, while the Shanghai Composite Index lost 0.7 per cent, hitting a fresh eight-month low.
E-commerce giant Alibaba declined 1 per cent to HK$79, rival JD.com dropped 2.8 per cent to HK$101.40 and Tencent weakened 0.9 per cent to HK$369.80. Longfor tumbled 3.7 per cent to HK$8.27 and China Resources Land lost 3 per cent to HK$20.20, leading declines among mainland developers.
Overall sentiment took a hit after the latest Chinese economic data showed deflationary pressure continues to loom large. The consumer price index was up 0.6 per cent last month, below a forecast for an increase of 0.7 per cent. The reading in July was up 0.5 per cent. Factory-gate prices remained in deflation, with the producer price index dropping 1.8 per cent, missing estimates.
Additional economic data due later this week could show further weakness in the mainland economy. Exports are expected to slow to 6.6 per cent growth from 7 per cent in July, while import growth may plunge to 2.3 per cent from 7.2 per cent, according to consensus estimates from economists tracked by Bloomberg.
Adding to the bearish mood, Citibank joined JPMorgan and Nomura to snub Chinese stocks due to soft earnings growth and consumption demand. The bank slashed the year-end target for the Hang Seng Index to 19,800, down 3 per cent from the previous target, Pierre Lau, China equity strategist at Citi said in a note on Monday.
Elsewhere, China Renaissance, a boutique investment bank, plummeted by as much as 72 per cent to HK$2.06 per share after trading resumed on Monday.
Other major Asian markets were traded lower. Japan's Nikkei 225 slipped 2.4 per cent, while South Korea's Kospi declined 1.2 per cent and Australia's S&P/ASX 200 lost 0.8 per cent.
Source: SCMP
