Hong Kong, China stocks drop amid commodity price rout, signs of China economic weakness

SHANGHAI: Hong Kong’s share benchmark tumbled more than 2% on Monday while Shanghai stocks headed for their worst day in two months as a global rout in commodity prices hit sentiment across Asian markets.

Risk appetite was also hurt by China’s disappointing manufacturing activity data and deteriorating fiscal revenue growth.

Hong Kong’s Hang Seng Index dropped 2.4% by the lunch break, as commodity-related stocks suffered brutal sell-offs. In China, the blue-chip CSI300 Index lost 1.1% while the Shanghai Composite Index declined 1.3%.

Commodity-related stocks led the declines as global metal prices corrected sharply following recent surges.

An index tracking China’s non-ferrous metal stocks lost 6.3%. China’s CSI SSH Gold Equity Index tumbled more than 8% in the morning session, following Friday’s 9% plunge.

Shares of listed gold miners, including Sichuan Gold Co , Shanjin International Gold Co and Zhaojin International Gold, all fell by 10%, the most allowed for the day.

In Hong Kong, the Hang Seng Materials Index slumped more than 5%. Sentiment was also soured by an official survey showing China’s factory activity faltered in January as weak domestic demand dragged down production at the start of the new year.

These disappointing outcomes, “coupled with deteriorating fiscal revenue growth and a sharp contraction in auto sales, lends additional support to our view of a demand cliff,” Nomura chief China economist Lu Ting said.

Shares fell across the board in Hong Kong, with biotech, chipmaking and telecom stocks among the worst performers.

In China, market losses were partially offset by gains in liquor, consumer and financial stocks .