Economy 2 MIN READ

China stocks drop as weak recovery, lack of strong stimulus weigh

June 29, 2023By Reuters

China and Hong Kong stocks closed lower on Thursday, as traders maintained a cautious stance on signs of weak recovery in the world’s second-largest economy and a lack of strong stimulus.

** China’s blue-chip CSI300 Index declined 0.5% and the Shanghai Composite Index slipped 0.2% at close.

** Hong Kong’s benchmark Hang Seng Index dropped 1.2%, and the Hang Seng China Enterprises Index was down 1.5%.

** Other Asian shares fell after global central banks reaffirmed their resolve to beat inflation, warning rates may need to rise further.

** Real estate developers in China lost 1.8%, as a lack of strong support measures for the sector disappointed investors.

** “There’s no indication they will abandon their fundamentally hawkish stance towards property, which they (policymakers) believe is in long-term decline,” said Gavekal Dragonomics analysts in a note.

** Shares of tourism companies fell 2.4%, while the food & beverage sector declined 1.5%.

** Data on Wednesday showed annual profits at China’s industrial firms extended a double-digit decline in the first five months as softening demand squeezed margins, reinforcing hopes of more policy support to bolster a stuttering post-COVID economic recovery.

** A Reuters poll showed on Thursday that China’s factory activity likely contracted for a third straight month in June, albeit at a marginally slower pace.

** Foreign investors sold a net 7.6 billion yuan (USD 1.05 billion) of Chinese shares on the day.

** US Treasury Secretary Janet Yellen said she hoped to travel to China to reestablish contact with Beijing, acknowledging there were disagreements between the two countries, MSNBC reported on Wednesday.

** The United States and China agreed to consider expanding commercial flights between the two countries to improve people-to-people contact.

** Tech giants listed in Hong Kong slumped 1.7%.

(Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

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