Meituan leads losses, BYD sell-off persists as Hong Kong stocks slide to one-week low on China manufacturing slump

  • A private sector report shows manufacturing shrank in August, confirming a similar reading published by China’s statistics bureau
  • BYD slides again while Bosideng suffers a 7.2 per cent beating as major shareholders cut stakes

Hong Kong stocks traded at a one-week low after a private sector report showed China’s manufacturing contracted in August, showing policy measures are not working fast enough to stimulate the economy. Further rate increases in the US also fuelled losses.

The Hang Seng Index retreated 1.5 per cent to 19,650.77 at the noon break, the lowest since August 24. The benchmark fell 1 per cent in August, a second month of retreat. The Hang Seng Tech Index sank 1.2 per cent while the Shanghai composite Index gained 0.2 per cent.

Meituan lost 4.5 per cent to HK$181.30, leading index decliners on renewed speculation Tencent will trim its holding. Orient Overseas tumbled 6.4 per cent to HK$162. Auto retailer Zhongsheng lost 6.2 per cent to HK$34.95 while BYD suffered an extended sell-off with a 4.9 per cent slide to HK$230.40.

“The economic recovery momentum seems to be fading,” said Zhou Jianhua, an analyst at Central China Securities. “The issue is that aggregate demand is weak, with weakening consumption and a slumping property market. Even if the growth-stabilising measures are stepped up, the recovery will still be weak this quarter.”

The Caixin PMI Manufacturing Index slipped to 49.5 in August from 50.4 in July, today’s report showed, hitting the lowest since a two-month lockdown in Shanghai was lifted. Reading below 50 indicates contraction. A similar gauge released by China’s statistics bureau on Wednesday showed manufacturing contracted for a second straight month in August.

The past month proved to be turbulent for traders eyeing a reversal in sentiment. Escalating tension between China and the US on Taiwan issues, a power shortage and the flare-up in Covid-19 outbreaks in the Hainan island and Shenzhen have combined to dent risk appetite.

Bosideng, China’s biggest down apparel maker, sank 7.2 per cent to HK$4.10 after New Surplus International Investment, a company controlled by founder and CEO Gao Dekang, plans to sell 230 million shares or a 2.1 per cent stake in the company at HK$3.94 each.

Biocytogen Pharmaceutical Beijing rose 7.1 per cent to HK$27 on its first day if trading in Hong Kong. Hangzhou Langhong Technology dropped 0.7 per cent to 16.88 yuan in Beijing, while fellow debutant Kunming Hendera Science and Technology surged 48 per cent to 8.61 yuan.

Other major benchmarks in Asia-Pacific slid before a US job report on Friday that is likely to show strong growth and reinforce rate-hike expectations. Japan’s Nikkei 225 fell more than 1 per cent, and South Korea’s Kospi and Australia’s equity gauge tumbled almost 2 per cent.

Author: Zhang Shidong, SCMP

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