Hong Kong and Chinese stocks slide as weak economic data dents sentiment
Hang Seng Index slumped 3.7 per cent to 20,318.79 for a second day of losses
The Hang Seng Index dropped 3.7 per cent to 20,318.79 at the close for a second day of losses. The Hang Seng Tech Index slumped 4.7 per cent. The CSI 300 Index sank 2.7 per cent and the Shanghai Composite Index retreated 2.5 per cent.
Chinese technology stocks paced the declines in the city, with Meituan and Baidu falling more than 5 per cent. Gold producer Zijin Mining Group fell after bullion prices retreated on expectations that the Federal Reserve could roll back interest-rate cuts.
China’s exports grew 2.4 per cent year on year in September, the slowest since May, according to customs data. Meanwhile, commercial banks extended 1.6 trillion yuan (US$226 billion) of new loans last month, according to the central bank, missing a median forecast of 1.9 trillion yuan in a Bloomberg survey of economists. Aggregate finance, a measure of broader credit supply, also moderated from the previous month, indicating weak domestic demand.
After a more than 20 per cent rally over the past month, investors are keeping a close watch on the National People’s Congress (NPC), China’s legislative body. Its standing committee is due to convene later this month to possibly approve an increase in government borrowing and issuing of special government bonds to support the economy. Finance Minister Lan Foan hinted at the weekend that China has room to raise debt levels.
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Wild swings in Hong Kong and mainland China stock markets
“We believe [Beijing] has at least extended the ‘stimulus hope’ to the NPC’s standing committee meeting,” said Patrick Pan, a strategist at Daiwa Securities Group in Hong Kong. “Although we still believe the timing is good for early investors to selectively reduce some of their China stock positions, we continue to see some tactical opportunities for ‘swing’ trades over the next two to three weeks.”
