HONG KONG: China and Hong Kong stocks extended declines on the last trading day of January, both heading for a sixth straight losing month as economic data and stimulus measures disappoint.
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The blue-chip CSI 300 Index slipped 0.2% and the Shanghai Composite Index dropped 0.4%.
Hong Kong’s Hang Seng Index dropped 1% and the Hang Seng China Enterprises Index fell 1.1%.
Hang Seng was on track for its worst January performance since 2016, with tech and property stocks leading the decline.
Hang Seng Tech Index and Hong Kong-listed mainland property stocks tumbled 19% each so far in January.
China’s manufacturing activity contracted for a fourth straight month in January, an official factory survey showed on Wednesday.
The official purchasing managers’ index (PMI) rose to 49.2 in January from 49.0 in December, below the 50-mark separating growth from contraction and was in line with a median forecast of 49.2 in a Reuters poll.
The manufacturing data “suggested that disinflationary pressures continued in January,” Goldman Sachs economists said in a note.
More Chinese cities, including Suzhou and Shanghai, have relaxed home purchase restrictions this week in a bid to revive demand, yet property stocks remained weak as the policies are seen as piecemeal.
China shows a more proactive stance to shore up growth, HSBC analysts said in a note.
“Nonetheless, consistency and persistence of policy support will still be needed to help achieve a growth target of ‘around 5%’, they said.
In China domestic A-shares, tourism and healthcare stocks were among the worst performers, losing 2.9% and 2.4%, respectively.
Meanwhile, yields on the benchmark 10-year government bond, fell nearly 2 basis points to 2.4275%, the lowest since June 18, 2002, indicating the persistent investor expectations for imminent monetary easing.