Hong Kong stocks fell in early deals on Tuesday as China’s economic gloom punctured investor sentiment, with major investment banks downgrading their economic projections for the world’s second largest economy.
The Hang Seng Index slipped 1.3% at 11:20am local trading time. The Hang Seng Tech Index declined 1.6%, while the Shanghai Composite Index was unchanged.
Logistics company Orient Overseas International fell 6%, travel giant Trip.com slid 4.2% while sportswear brands Li Ning retreated 3.6% and Anta Sports declined 1.6%.
Economic data released on Monday showed growth momentum had weakened, leading to many major banks trimming their GDP forecasts. Barclays cut their China GDP forecast to 4.8 per cent from 5 per cent, Goldman Sachs reduced theirs to 4.9 per cent from 5 per cent and JPMorgan downgraded it to 4.7 per cent from 5.2 per cent.
“We are cautious about the second half”, as growth momentum weakens due to the sustained housing crisis with Beijing yet to execute a plan to complete the millions of unfinished pre-sold homes, analysts at Nomura including Ting Lu said in a note on Tuesday.
Ping An Insurance fell 4.7% after it announced the sale of a US$3.5 billion convertible bond in an exchange filing this morning. Tech stocks mostly declined, as Baidu fell 3.8%, Alibaba dropped 1.3% and Tencent retreated 1.8%.
US Federal Reserve Chair Jerome Powell’s comments overnight that the he had “greater confidence that inflation was moving sustainably down towards our 2 per cent target” saw traders price in a greater chance of a rate cut at the September meeting.
This growing optimism has seen a rush of borrowers into the bond market. Hong Kong’s government hired banks for a possible dollar, euro and offshore yuan green bond offering under its HK$500 billion global medium-term note programme. China Cinda announced a two tranche sale of dollar bond, while SM Investments and Mitsubishi HC Finance also mandated banks for proposed bond sales.
Other major Asian markets were mixed. Australia’s S&P/ASX 200 slipped 0.2 per cent and South Korea’s Kospi was flat. Japan’s Nikkei 225 climbed 0.4 per cent.