HONG KONG: China and Hong Kong shares dropped Tuesday as Beijing released lower GDP growth and economic activity data for the fourth quarter, and investors sold on gains ahead of the Lunar New Year holiday.
China’s blue-chip CSI 300 Index dipped 0.16%, while the Shanghai Composite Index declined 0.25%, retreating from a four-month high.
Hang Seng Index dropped 1.01% and Hang Seng China Enterprises Index slid 0.76%.
China’s economy grew 2.9% in October-December from a year earlier, data from the National Bureau of Statistics (NBS) showed on Tuesday, slower than the third-quarter’s 3.9% pace, as the fourth quarter was hit hard by stringent COVID curbs and a property market slump.
China’s property investment fell 10.0% year-on-year in 2022, the first decline since records began in 1999, and property sales slumped the most since 1992, NBS data showed.
Weak population data adds to the market concerns - China’s population in 2022 fell for the first time since 1961, the NBS data showed.
Despite the weakness, economists expect China’s economy likely bottomed in December and a recovery is on the way in 2023, while flag risks persist in property sector, local government debt and disappearing demographic dividend.
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“December might be the bottom of Chinese growth trajectory in the near term,” said Chaoping Zhu, Shanghai-based global market strategist at J.P. Morgan Asset Management. “We expect to see a sustained economic recovery in 2023 as a result of reopening and policy stimulus.”
Zhiwei Zhang, chief economist at Pinpoint Asset Management expects China’s population will likely trend down from here in coming years. “Going forward demographics will be a headwind. Economic growth will have to depends more on productivity growth, which is driven by government policies,” he said.
By sector, insurance and liquor companies lost the most, dropping 1.7% and 1.3% respectively, while semiconductors jumped 2.4% and defense stocks climbed 1.1%
In Hong Kong, tech firms went down 0.64%.
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