SHANGHAI: China stocks hovered around five-year lows on Wednesday and Hong Kong shares tumbled to their weakest in 14 months, as China’s disappointing fourth-quarter growth data deepened worries about the world’s second largest economy.
China’s blue-chip CSI300 Index dipped 0.7% by the lunch break, hovering near the lowest level since early 2019.
The Shanghai Composite Index was 0.6% lower.
Hong Kong’s Hang Seng Index slumped nearly 3% to hit the lowest level since November 2022, led by property and tech shares.
China’s economy grew 5.2% in the fourth quarter from a year earlier, official data showed, missing analysts’ expectations.
Compounding investor anxiety, China’s December new home prices fell at the fastest pace since February 2015, marking the sixth straight month of declines, official data showed.
“China is undergoing an arduous economic restructuring that will witness the decline of many previously frothy sectors such as property. The stock market will fall as a result.” said Yang Tingwu, vice general manager of asset manager Tongheng Investment.
China stocks rise as investors await GDP data
Meanwhile, the market interpreted President Xi Jinping’s vow to create a modern financial system with Chinese characteristics as meaning Beijing was not in a hurry to loosen monetary policy.
A financial powerhouse should be based on “a strong currency, a strong central bank, strong financial institutions, a strong international financial center, strong financial supervision and a strong team of financial talents,” Xi was quoted by Xinhua as saying.
The message is that “China won’t flood the financial system with a lot of liquidity” and will tighten regulations, fund manager Yang said.
Kristina Hooper, chief global market strategist at Invesco, said that China’s disappointing data raised concerns about deflation.
“Corporate revenues in China look poised to weaken and sales expectations for the year are being lowered,” Hooper said in a note.
Stocks fell across the board in China and Hong Kong. Shanghai’s tech-focused STAR 100 Index slumped 1.9%, while the tourism sector lost 1.8%.
In Hong Kong, an index tracking mainland developers tumbled 4.1% to record lows.
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