China Indexes Lack Momentum and Direction, Tier-1 Property Market Shows Strength

Li Chen
04 Jul, 2024
Hong Kong

Stock market indexes in Hong Kong and Shanghai lacked direction, and investors looked overseas amid a lack of new catalysts. 

The Hang Seng index and the CSI 300 index traded around the flatline amid a fragile and uneven economic recovery, weak consumer sentiment, and a lack of broad policy reforms. 

Investors took an optimistic view of the latest slew of soft U.S. economic data after private sector payrolls rose less than expected in June and initial unemployment claims rose for the fourth week in a row. 

Moreover, the service sector unexpectedly contracted in June, supporting the case that the Federal Reserve may cut rates as early as September. 

Closer to home, purchasing managers' index for the service sector eased to 48.2 in June from 49.2 in May, according to the latest data provided by S&P Global. 

The business activity index contracted for the second month in a row, as any reading below 50 indicates contraction. 

Elections in the UK and France are likely to dominate news flow, and bond yields are likely to stay elevated in Europe. 

Voters in the UK are set to vote in a parliamentary election on Thursday, and the Labour Party is likely to win the largest share of seats in a historic vote. 

Preliminary polls suggest that voters are likely to deliver the biggest shakeup of UK politics in decades, after 14 years of Conservative Party government. 

The Labour Party is estimated to win as many as 484 seats in the 650-seat House of Commons' election scheduled for July 4, according to the latest poll released by Survation. 

The Conservative Party is estimated to garner only 64 seats, barely reaching the minimum seats needed to be an official opposition party. 

 

China Stock Movers 

The Hang Seng index was nearly unchanged at 17,977.45, and the CSI 300 index declined 0.1% to 3,459.11. 

Tech stocks were in focus amid speculation that earnings in the second quarter are likely to exceed market expectations. 

Meituan jumped 2.3% to HK $119.80, Baidu gained 0.8% to HK $86.90, and Alibaba Group added 1.1% to HK $73.05. 

Property stocks were under pressure despite the improving sentiment in the tier-1 cities. 

Existing home sales in the largest 14 cities in mainland China in June increased 11.2% on the month and 27.9% from 119,470 units a year ago, the Zhuge Real Estate Data Research Center said on Wednesday. 

The monthly sales were the highest since May 2023. 

Henderson Land Development, China Vanke, China Resources Land, and Longfor Group declined between 0.1% and 1.3%. 

BYD, Li Auto, and Xpeng gained between 2% and 3% on speculation that the European Union may slow or water down the upcoming additional tariffs on Chinese electric vehicles.