China, HK stocks slip as economic woes offset Biden-Xi summit optimism

SHANGHAI: China and Hong Kong stocks slipped on Monday as initial euphoria over a summit between the top leaders from the world’s two largest economies later this week was offset by lingering concerns over China’s economic health.

** China’s blue-chip CSI300 Index was down 0.5% by the lunch break and the Shanghai Composite Index dipped 0.2%. Hong Kong’s benchmark Hang Seng Index was down 0.1%.

** US Treasury Secretary Janet Yellen said on Friday that she agreed with Chinese Vice Premier He Lifeng to “intensify communication” on economic issues.

** The message came ahead of a scheduled meeting this week between US President Joe Biden and his Chinese counterpart Xi Jinping in San Francisco.

** Gavekal Dragonomics said geopolitical risks have retreated as China and the US resume working- and leadership-level contacts, “but the shift in policy direction, while welcome, still awaits confirmation that the economy is actually getting onto a firmer footing.”

China stocks close down as global rate concerns weigh

** Investors are closely monitoring a slew of economic data to be released this week, including industrial output, urban investment and retail sales for October. Early indicators are that growth momentum weakened again in October following a tentative rebound in previous months.

** “The debate on investing in China has shifted profoundly towards long-term structural challenges particularly on debt and deflation fronts, and should continue well into 2024,” Morgan Stanley strategists wrote.

** “As a result, the hurdles ahead to a sustainable China equity market recovery are still high, with mounting macro pressure on earnings coupled with currency weakness.”

** Chinese developers listed in Hong Kong and China continued to sag, with ratings agency Moody’s warning that “China’s prolonged property market downturn will have adverse spillover effects amid slowing economy.”

** China bank shares also fell, with index heavyweight Industrial and Commercial Bank of China (ICBC) dropping more than 1% in Shanghai following a ransomware attack on ICBC’s U.S unit.