China Stocks Face Renewed Downward Pressure Amid Low Expectations Ahead of Third Plenum

Li Chen
08 Jul, 2024
Hong Kong

Stocks in Hong Kong and Shanghai traded down on Monday after a week of choppy trading. 

The Hang Seng index dropped nearly 2%, and the CSI 300 index declined close to 1% due to persistent economic growth worries. 

The market rally powered by the state-controlled bank intervention lost steam as investors shifted their focus to the upcoming earnings season and a gathering of policymakers. 

Investors are hoping that policymakers may announce significant reforms at the end of the third four-day plenary session of 300 communist party policymakers this week. 

However, hopes are receding for deep and broad reforms because of the central government's lack of financial headroom and weak consumer sentiment. 

The growth in exports has contributed to the economic growth in the current year, but the growth is expected to slow down in the second half as the economies in the U.S. and the European Union are expected to face further headwinds. 

Moreover, rising trade tensions with the European Union are also weighing on market sentiment, and the commerce ministry said it plans to hold an anti-dumping hearing next week for the import of brandy from the region. 

In Europe, the euro edged slightly lower after France's second round of parliamentary elections showed a hung parliament with three major blocks but no clear majority. 

France's newly formed New Popular Front won 182 seats, President Emmanuel Macron's coalition ensemble clinched 168, and the far-right National Rally Party won 143 seats. 

 

China Stock Movers 

The Hang Seng index decreased 1.7% to 17,499.27, and the CSI 300 index dropped 0.7% to 3,408.55. 

Shipping stocks remained under pressure for the second week in a row. 

COSCO Shipping declined 7.2% to HK $12.46, and Orient Overseas dropped 6.4% to HK $120.20. 

Ganfeng Lithium fell 4.7% to HK $15.30 after the mining company said the mainland financial regulator fined the company for insider trading. 

Property developers continued to slide for the second week in a row amid worries of a lack of demand outside the top-tier cities. 

Longfor Group decreased 3.5% to HK $10.74, China Vanke fell 4.5% to HK $4.49, and China Resources Land decreased 3% to HK $26.60.