SHANGHAI: China and Hong Kong stocks were flat on Wednesday, as many traders were reluctant to take fresh positions ahead of the long Labour Day holiday, while data showed new export orders plummeted due to aggressive US tariffs.
China stocks inch lower, Hong Kong up slightly
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Both China’s blue-chip CSI300 Index and the Shanghai Composite Index were little changed by the lunch break.
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Hong Kong’s Hang Seng Index rose 0.2%, but is poised to drop 5% in April - the biggest monthly fall in 16 months.
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China’s factory activity contracted at the fastest pace in 16 months in April, reflecting the impact of the US-China trade war, but the survey result also fuelled hopes for stronger government stimulus.
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“Government stabilisation efforts will keep growing, and there will be more willingness for listed companies to distribute dividends and buy back shares,” Zheng Gang, strategist at Yingda Securities, wrote.
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The brokerage recommends high-dividend blue-chips, consumer stocks and tech shares, betting they will benefit from Beijing’s policy to boost consumption and support homegrown technologies.
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China’s artificial intelligence (AI) stocks and tech-laden STAR 50 Index rose, after Chinese President Xi Jinping used a visit to Shanghai on Tuesday to push for breakthroughs in AI.
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Meanwhile, shares of Chinese ethane importers including China Petroleum, Satellite Chemical and Wanhua Chemical rose, after news that China has waived the 125% tariff on ethane imports from the United States imposed earlier this month.
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But banking shares were among the biggest losers on Wednesday, after China’s Big Five lenders reported narrower margins in the first quarter amid a protracted economic slowdown and property crisis.
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China’s stock market will be closed from May 1 until May 5 for the Chinese Labour Day, and will resume trading on Tuesday.
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Hong Kong shares will be suspended from trading on Thursday and Monday for public holidays.
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