Hong Kong stocks drop as China reports signal weak growth while liquidity concerns undermine developers

  • Stocks lose early gains as China economic reports signal weak growth, liquidity concerns undermine property developers
  • The Beijing stock exchange kicks off trading with three-quarters of companies making a winning debut

Hong Kong stocks fell as China’s economic reports for October showed little signs of meaningful recovery this quarter, strengthening policy easing bets. Property stocks weakened as liquidity concerns dominated sentiment.

The Hang Seng Index dropped 0.1 per cent to 25,307.34 at the local noon break, halting a four-day winning streak. The Hang Seng Tech Index added 0.5 per cent while China‘s Shanghai Composite Index lost 0.3 per cent.

An index tracking property developers retreated as a fundraising by Sunac China underscores persistent worries about debt defaults. The developer announced a plan to raise US$653 million from a stock placement while chairman Sun Hongbin offered to lend US$450 million to the group. Sunac plunged 9.3 per cent. Kaisa Group cancelled a plan to pay an interim dividend.

Country Garden declined 4.8 per cent and its services unit retreated 5.6 per cent. China Resources Land lost 2.5 per cent. Among gainers, AIA Group and WuXi Biologics gained more than 2 per cent. Tencent Holdings rose 1.8 per cent gain while Bilibili climbed 1.6 per cent.

Economic reports on Monday signalled China’s growth remained weak this quarter. New home prices dropped 0.25 per cent in October from a month ago, the government said on Monday, steeper than a 0.08 per cent decline in September. Separately, industrial production rose 3.5 per cent from a year earlier, while retail sales grew 4.9 per cent. Both were marginally better than economists predicted.

China’s GDP growth slipped to 4.9 per cent last quarter from 7.9 per cent in the preceding three months. Global fund managers are lately turning less bearish on Chinese stocks, with BlackRock seeing an easing in monetary, fiscal and regulatory policies, adding that a broad tightening over the past few months has slowed economic growth momentum.

On the mainland, the Beijing Stock Exchange opened for business on Monday, a new bourse that focuses on small and medium enterprises. About three quarters of 81 companies made a winning debut.

Two firms started trading for the first time in mainland China. Shanghai Aohua Photoelectricity Endoscope, a medical devices manufacturer, jumped 72 per cent. Nanjing Vazyme Biotech Co, which develops and distributes biotechnology products, rose 64 per cent.

Elsewhere, Asian markets were trading broadly higher. South Korea’s benchmark index advanced 1 per cent while Japanese equities rose 0.4 per cent and Australian stocks advanced 0.6 per cent.

Author: Cheryl Heng, SCMP

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