Hong Kong stocks fell for a second day, paring the weekly gain on the benchmark index, as mixed China data showing industrial production growing and retail sales still weak weighed on sentiment.
The Hang Seng Index lost 0.2 per cent, or 47.66 points, to 25,183.01 at the close on Friday. The gauge see-sawed to change directions at least 10 time after China’s National Bureau of Statistics put out the July economic data at 10am.
Swire Pacific and HSBC Holdings led the declines with a drop of at least 2 per cent, while China Unicom and China Life Insurance were among top gainers, advancing more than 2 per cent.
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China’s Shanghai Composite Index added 1.2 per cent to 3,360.10.
Industrial output in mainland China increased 4.8 per cent from a year earlier in July, while retail sales slid 1.1 per cent, contracting for an at least fifth straight month, according to the statistics bureau. Both numbers were below the estimates of economists in a Bloomberg survey.
The lacklustre data may have been distorted by the recent heavy rains and floods in some part of the country, according to Stephen Innes, a strategist at AxiCorp.
“Activity data likely would have been stronger without these weather-related impacts,” he said. “Still, the glaring concerns around retail demand continue to speak volumes that it's going to take more than stimulus and deep discounts on luxury products to get people shopping again.”
China will continue its accommodative monetary policies for the rest of the year to spur sluggish consumption by focusing more on targeted easing, such as cuts in the reserve requirement ratios by 50 basis points and the one-year loan prime rate by 30 basis points, according to China Renaissance Holdings.
Adding to the skittish sentiment was the stalemate in the latest coronavirus-relief package in the US. House Speaker Nancy Pelosi rebuffed an overture from Treasury Secretary Steven Mnuchin to resume negotiations on new stimulus packages, saying the White House refused to budge on the size of the relief plan. Mnuchin blamed Pelosi for refusing to compromise.
For the week, the Hang Seng Index advanced 2.7 per cent, capping the biggest five-day gain in a month, as casino operators rallied after China resumed some visa issuances to tourists to Macau. Sands China climbed 12 per cent for the week and Galaxy Entertainment Group advanced 9.8 per cent.
Traders will probably need to navigate through uncertainty of the China-US ties and the earnings season in weeks ahead. Top officials from the world’s two largest economies are expected to meet over the weekend to review the implementation of the phase-one trade deal that took effect six month ago. A litany of Chinese companies are due to release interim reports in the fortnight, which will shed light on how they have recovered from the damage of the coronavirus epidemic after posting a 42 per cent decline in first-quarter profit for the worst earnings in a decade.
Li Ning, the Chinese sportswear maker, surged 8.4 per cent to HK$31.55 for a record close after saying first-half net income increase 22 per cent from a year earlier to 683 million yuan (US$98.3 million). That beat the analysts’ estimates by 24 per cent, according to Bloomberg data.
Soho China sank 6.7 per cent to HK$2.63 after saying a plan by investors including US private-equity firm Blackstone to take the Beijing-based office developer private fell apart.
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