Hong Kong stocks slip from 2-week high as weak China data outweighs rate optimism
- Sentiment sours following China’s bigger-than-anticipated decline in credit demand last month
The Hang Seng Index lost 0.4 per cent to 17,113.36 on Wednesday, snapping a five-day winning streak. The Tech Index dropped 1 per cent, and the Shanghai Composite Index fell 0.6 per cent to a six-month low.
Tencent dropped 1.3 per cent to HK$373.80 ahead of its earnings card later today. Gaming firm NetEase lost 3.9 per cent to HK$133.70, and food delivery platform Meituan fell 1.3 per cent to HK$102.10. Wuxi Biologics declined 4.3 per cent to HK$11.22, while sister company Wuxi AppTec retreated 4 per cent to HK$33.25.
Sentiment soured after China’s total social financing and new loans data disappointed again due to weak credit demand. In particular, loans to the real economy shrank by 77 billion yuan (US$10.8 billion) last month, the largest drop on record and the first decline since July 2005.
“This exacerbates concerns of deflation and a liquidity trap, boding ill for consumption and investment,” analysts at Barclays including Yingke Zhou said in a note. The deleveraging cycle triggered by the collapsed housing bubble may be “only half done”, they added.
Meanwhile, fresh reports due on Thursday are likely to show more signs of tepid growth momentum in the world’s second-largest economy. Retail sales are expected to have grown by 2.6 per cent in July, a marginal improvement from the previous month, while industrial production growth is forecast to slow, according to consensus among economists tracked by Bloomberg.
