China Stocks Extend Weekly Selloff Amid Earnings Growth and Property Market Worries

Li Chen
30 May, 2024
Hong Kong

Stocks in Shanghai and Hong Kong remained under pressure for the third consecutive day due to lingering property market woes and a lack of effective policy responses. 

Market jitters were compounded after hawkish comments from U.S. policymakers raised the prospect of interest rates staying higher for longer and a possible rate cut that may not materialize in 2024. 

The yield on 10-year U.S. Treasury bonds rose above 4.5%, a troublesome level for the stock market, as rising bond yields attract more fund flows away from the riskier stock markets. 

The rise in U.S. bond yields dragged down market indexes in Tokyo and Seoul by 1% and in Mumbai and Sydney by 0.5%. 

Benchmark indexes in Hong Kong trimmed the five-week market gains to less than 12% from 20% after policymakers' drive to lift the embattled property market showed little progress. 

Shanghai and Guangzhou were the latest tier-one cities to relax curbs on buying properties and support loosened mortgage standards, but the lack of confidence in property developers kept buyers away. 

Moreover, job market uncertainty and elevated home prices have also dampened interest from first-time home buyers. 

On the economic front, investors are looking forward to the release of China's survey of the manufacturing industry, and most economists are anticipating the sector to expand for the third month in a row.

The manufacturing sector's health is closely watched by policymakers because the sector is one of the largest contributors to economic growth and critical for creating new jobs. 

 

China Stock Movers 

Market indexes in Shanghai and Hong Kong extended weekly losses to over 2.5% amid persistent worries about earnings growth and property market woes. 

The CSI 300 index decreased 0.5% to 3,594.81, and the Hang Seng index dropped 1.5% to 18,208.58. 

Longfor Group declined 3.9% to HK$12.68, China Resources Land dropped 3% to HK$29.15, and China Vanke fell 5.4% to HK$5.47. 

Electric vehicle markers generally traded down on the worry that additional U.S. sanctions imposed on Russia may negatively impact the export of automobiles. 

BYD rose 1.4% to HK$220.60, Li Auto dropped 2.7% to HK$77.75, and Xpeng declined 1.7% to HK$31.85. 

Banks traded down amid market volatility and speculation that the People's Bank of China may be forced to lower its 5-year loan prime rate amid property market woes and economic growth weakness. 

Bank of China dropped 2.2% to HK$3.70, ICBC declined 1.7% to HK$4.47, and China Construction Bank fell 2.1% to HK$5.57. 

Zijin Mining Group declined 5.7% to HK$17.02 after volatile gold and silver prices declined on the speculation that U.S. interest rates are likely to stay higher, supporting a higher dollar in international currency trading.