Yahoo Finance Chinese Stocks Slump as Economic Concerns Spoil Investor Mood
(Bloomberg) -- Chinese stocks dropped after traders returned from a long weekend as a slew of negative developments weighed on sentiment.
Most Read from Bloomberg
Apple Hits Record After Unveiling ‘AI for the Rest of Us’ Plan
NYC Landlord to Sell Office Building at Roughly 67% Discount
Russia Is Sending Young Africans to Die in Its War Against Ukraine
The CSI 300 Index of mainland shares closed down 0.9% to its lowest level in more than six weeks after markets reopened from the Dragon Boat Festival holiday. A gauge of Hong Kong-listed Chinese shares was among the biggest decliners in Asia, falling as much as 2% before paring some losses.
The retreat came as weak travel spending and renewed concern over the property sector reinforced worries over the sustainability of China’s economic recovery. Geopolitical risks weighed on shares of electric vehicle makers as traders awaited the European Commission’s decision of provisional duties expected this week.
“The recent weekend holiday didn’t see as strong consumption as the previous May golden week, and weekly property sales are weak though that’s also volatile,” said Xin-Yao Ng, director of investment at abrdn. “These follow on from weak macro readings earlier like the NBS PMI and imports,” he said.
While domestic tourism spending rose 8.1% year-on-year during the extended weekend, the trend showed weakening momentum compared to other recent short holidays, according to Citigroup Inc. Average spending per traveler remained muted, analysts Brian Gong and Alicia Yap wrote in a note, weighing on travel-related stocks including Changbai Mountain Tourism Co.
Authorities’ recent emphasis to stabilize the property market failed to lift sentiment as Dexin China Holdings Co. became the latest builder to be wound up. Developer stocks entered a technical bear market last week amid skepticism over a broad support package unveiled by the central government.
“The overall weak market due to lowered hope of a rate cut from US this year — combined with very fragile investors’ confidence on the property market — contributed to property stocks’ declines today,” said Raymond Cheng, head of China property research at CGS International Securities Hong Kong. “Some investors wanted to see the evidence of recovery before getting in the sector.”
China’s nascent stock rally is losing momentum, with a gauge of companies listed on the Shanghai stock exchange coming close to falling below a key psychological level for the first time since late-March on a closing basis.
Traders are expecting more forceful measures to support the market after recent efforts fell short of expectations. They will also be focused on the upcoming third plenum, a closed-door conclave in July, for signals of potential policy pivots and future moves to steady the slowing economy.
--With assistance from Jing Jin.
(Updates with closing prices and analyst comment)
Most Read from Bloomberg Businessweek
As Banking Moves Online, Branch Design Takes Cues From Starbucks
Food Companies Hope You Won’t Notice Shortages Are Raising Prices
Legacy Airlines Are Thriving With Ultracheap Fares, Crushing Budget Carriers
Sam Altman Was Bending the World to His Will Long Before OpenAI
©2024 Bloomberg L.P.
