HONG KONG: Chinese and Hong Kong stocks fell on Friday after rebounding from five-year lows in the previous session, as a lack of convincing stimulus and economic data kept investors away.
The blue-chip CSI 300 Index edged down 0.2%, while the Shanghai Composite Index dropped 0.5%.
Hong Kong’s Hang Seng Index fell 0.5%, and the Hang Seng China Enterprises Index declined 0.9%.
All four indexes fell for the third consecutive week, down between 0.4% and 6.5%.
Foreign capital recorded net selling of 22 billion yuan ($3.06 billion) via the Stock Connect’s northbound trading link this week.
China is likely ramping up efforts to rescue the market.
Some exchange-traded funds tracking key indexes saw spikes in daily turnovers this week in particular on Thursday and Friday, suggesting state-backed funds may be lending support.
Daily turnover of Huatai-PB CSI 300 ETF surged to over 12 billion yuan on Friday, after hitting the highest daily turnover since 2015 on Thursday at 15 billion yuan.
UBS estimates MSCI China is now trading at record discount compared to MSCI World and MSCI Emerging Markets indexes.
“It would seem that equity investors are pricing in a more pessimistic outlook on the domestic economy than investors in other markets,” UBS analysts said in a note, adding the risk-reward is attractive at this level.
Fund manager Value Partners expects China’s economy to recover starting in the second quarter this year.
“We expect the market to be bottoming, with some funds starting to reposition for a U-shape rebound this year,” said Kelly Chung, investment director at Value Partners.
Photovoltaic industry and internet finance sector were the worst decliners, dropping 2.3% and 2.2% respectively.
However, stocks related to Apple’s supply chain gained, with Foxconn Industrial Internet jumping 3.6% and Luxshare Precision Industry rising 2.2%. Tech giants listed in Hong Kong declined 1.5%.
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