Hong Kong stocks hits 1-week low as SMIC drags, China exports cool, yuan slips

The Hang Seng Index slipped 1.3 per cent to 18,202.07 at the closing of Thursday trading, the lowest level since August 28. The Tech Index slipped 2 per cent while the Shanghai Composite Index erased gains to lose 1.1 per cent.

JD.com tumbled 3.1 per cent to HK$128.50, Tencent lost 1.8 per cent to HK$321.60 and Meituan dropped 2.6 per cent to HK$125. Chinese developer Longfor retreated 2.7 per cent to HK$17.42 and China Resources Land declined 1.6 per cent to HK$33.85.

The Hang Seng Index has lost 1 per cent this week, halting a two-week rebound as Beijing’s stimulus measures failed to convince investors while the economy struggled. Foreign funds have sold 4.8 billion yuan (US$655 million) of onshore stocks this week, Stock Connect data shows, extending a record selling spree in August.

China’s exports contracted 8.8 per cent last month, after shrinking 14.5 per cent in July, the customs bureau reported today. That was in line with consensus estimates from analysts tracked by Bloomberg. Imports fell 7.3 per cent versus 12.4 per cent in July.

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“Medium-term challenges, such as demographics, the multi-year property downturn, local government implicit debt problems and geopolitical tensions, may become more important for the growth outlook,” Goldman Sachs said. “As such, we expect meaningfully lower growth in 2024 and 2025.”

Even with increased policy offsets, the risks are skewed slightly to the downside, the Wall Street investment bank added in a report. An unfavourable interest-rate spreads will continue to pressure the Chinese yuan in the near term.

The onshore yuan recently traded at 7.3268 per US dollar, near the weakest since 2008, adding to an almost 6 per cent depreciation this year. China has been easing domestic rates to help revive the home sales and repair confidence in the property market, while the Federal Reserve has been raising rates from near-zero since March last year.

Oil producers were the bright spot. PetroChina added 2.9 per cent to HK$6.02 while CNOOC advanced 0.5 per cent to HK$13.48, after a rally in global crude prices.

Asian markets traded lower on Thursday. Japan’s Nikkei 225 lost 0.8 per cent, while Australia’s S&P/ASX 200 and South Korea’s Kospi declined by 0.6 to 1.2 per cent.