China and Hong Kong stocks open 2025 lower amid weak economic data

SHANGHAI: China and Hong Kong stocks fell on their first trading session of 2025, hurt by weaker-than-expected Chinese factory activity data, while investors awaited more policy support.

Chinese stocks post first annual gain since 2020

• China’s blue-chip CSI 300 Index dropped 1.4% by the lunch break, while the Shanghai Composite Index lost 1.1%. Hong Kong benchmark Hang Seng was down 1.5%.

• China’s factory activity grew in December but at a slower-than-expected pace, missing investors’ expectations, as overall sales were dampened by falling export orders amid concerns over the trade outlook, a private-sector survey showed.

• Chinese stocks registered their first annual gain in 2024 following an unprecedented three-year decline, as a package of stimulus policies lifted investor sentiment.

• “The equity market’s performance will largely depend on the strength of upcoming policies,” said analysts at Huaxi Securities in a note.

• “Uncertainties surrounding potential tariff increases by the Trump administration could affect exports. Boosting domestic demand remains crucial for fundamental recovery.”

• Many market participants expect the market will lack clear direction until the National People’s Congress in March, where the government’s growth target and stimulus measures will be announced.

• China’s central bank kicked off a second round of operations this week under a newly-created funding scheme for financial institutions to aid the country’s stock market.

• On Thursday, financial and tech shares led the declines, falling 1.8% and 2.6% respectively.

• Real estate stocks retreated 0.7%, despite prices of new homes in China rising at a slightly faster pace in December.

• Small stock index CSI 2000 was one of the few bright spots, up 0.6%, as retail investors often favour small stocks for potentially quick gains despite the risks involved.

• Hypermarket chain Sun Art shares were down nearly 17%, after Alibaba said on Wednesday it had agreed to sell its majority stake in the company to Chinese private equity firm DCP Capital. Alibaba stocks slipped 0.7%.

• Tech giants traded in Hong Kong were down 1.5%.