SHANGHAI: China and Hong Kong stocks dropped by the most in nearly a month on Friday as an overnight tumble on Wall Street and China’s weak economic data soured sentiment.
Investors also bit their nails over the fate of China’s top securities regulator, after sources told Reuters that Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), has sought approval to step down.
China’s blue-chip CSI300 Index closed down 1.6 percent, while the Shanghai Composite Index lost 1 percent after touching a 10-year high. Hong Kong benchmark Hang Seng fell 1.9 percent. Their daily performance was the worst since October 17.
Tech shares led the decline, following a Wall Street sell-off in Nvidia and other artificial intelligence heavyweights that was partly triggered by reduced odds of a December US rate cut.
The mood was further darkened by data showing China’s economic recovery is losing momentum.
China’s factory output and retail sales grew at their weakest pace in over a year in October, while new home prices fell at the fastest monthly pace in 12 months. It follows Thursday’s release of dismal credit data.
“Slowdown across the board,” Macquarie wrote in a note to clients, adding China’s “sluggish demand remains the key issue.”
However, the bank expects no major policy response by the year-end as China is on track to meet its growth target of around 5 percent this year. “As long as policymakers could achieve the growth target, they could tolerate the weakness in domestic demand,” Macquarie said.
Morgan Stanley’s China equity strategists said in a note that sentiment is subdued and “we expect current momentum to hold rather than break into new highs, with moderate earnings growth and limited valuation upside.”
In China, chip-making, consumer electronics and AI are among the worst performers.
The biggest losers in Hong Kong include media, Internet and consumer stocks.