Hong Kong stocks closed 0.66 percent lower on Thursday after downbeat Chinese manufacturing data indicated a recovery in the world's second-largest economy has yet to fully take hold. The Hang Seng Index dropped 165.66 points to 24,994.1 on turnover of HK$75.52 billion ($9.74 billion), the first losses on the bourse in four days. Mainland Chinese stocks also slipped after HSBC released figures suggesting manufacturing growth in the world's second-biggest economy slowed in August.
The Shanghai Composite Index slid 0.44 percent, or 9.75 points, to 2,230.46 on turnover of 140.9 billion yuan ($22.9 billion). The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.14 percent, or 1.71 points, to 1,223.83 on turnover of 171.3 billion yuan. HSBC's preliminary purchasing managers index (PMI), which tracks activity in China's factories and workshops, slipped to 50.3 this month, the British banking giant said.
The figure was down from a final reading of 51.7 in July and was the lowest for three months, it said. The indicator is a closely watched gauge of the health of the Asian economic powerhouse, with a reading above 50 indicating the sector is expanding. "It came as a surprise to us and the market," Swedish bank Nordea said of the Chinese data. "Credit conditions may be eased in the coming months, but at this point, we do not expect the authorities to cut interest rates on the backdrop of one month's data," the bank added.
The lacklustre data sparked a sell-off of raw materials and banking shares. Bank of China was down 0.54 percent to HK$3.65, while China Construction Bank was down 0.85 percent to HK$5.83. Shanghai slipped as much as 1.3 percent in the afternoon before regaining some ground, with analysts saying losses were likely to be capped by expectations that the Chinese government may take further measures to shore up growth.
Authorities in April began introducing a so-called "mini-stimulus" to boost growth including tax breaks for small enterprises, targeted infrastructure outlays and lending incentives in rural areas and for small companies. But Beijing has so far avoided more aggressive measures such as across-the-board interest rate cuts. "We may need to cut the reserve requirement ratio or ease borrowing costs for corporates to ease the cyclical growth recovery," Standard Chartered economist Li Wei said.
Comments
Comments are closed.