China Stocks Declined After Weak Economic Growth and Retail Sales Data

Li Chen
15 Jul, 2024
Mumbai

Amid cautious market sentiment, indexes in Shanghai and Hong Kong traded down after weaker-than-expected economic data. 

The Hang Seng index plunged as much as 1.5%, and the CSI 300 index traded volatile but stayed closed to the flatline. 

GDP growth in the second quarter fell short of market expectations, and a significant increase in retail sales in June showed persistent consumer demand weakness. 

China's economy expanded at an annual pace of 4.7% in the second quarter, falling short of the market estimate of an increase of 5.1%, the National Bureau of Statistics reported Monday. 

Growth in the second quarter slowed to 0.7% from the increase of 1.6% in the first quarter, due to persistent demand weakness amid a protracted property market slump. 

In separate reports, the statistical agency said retail sales in June from a year ago rose 2.0%, slower than 3.7% in May, and industrial output growth slowed to an annual pace of 5.3% from 5.6% in May. 

Property market weakness continues to hamper China's overall fixed-asset investment growth. 

Fixed-asset investment increased 3.9% in the five-month period to May from a 4% annual pace in the period a year ago. 

Property investment declined 10.1% in June, matching the rate in the previous month. 

The weakness in the property market, compounded by the slowdown in retail sales and fixed-asset investment, is likely to keep the second-largest economy's growth in check and may miss the 5% annual growth target set by the government. 

Moreover, China's urban jobless rate held steady at 5% in June, matching the rate in the previous month. 

China's economic data, especially the job market update, are widely viewed with skepticism because local governments have fudged economic growth estimates for years. 

Aggregate new home prices in the 70 largest cities in China declined 0.7% from the previous month in June and slowed to 0.71% in May, the National Bureau of Statistics reported Monday. 

New home prices declined 4.5% from a year ago in June, accelerating from a 3.9% decline in the previous month. 

Moreover, property prices declined for the 12th month in a row and dropped at the fastest pace since June 2015.

Except for Shanghai, prices declined in all major cities across China. 

However, existing home prices declined at a slower pace of 0.9% in June from the 1% fall in May, a separate report from the statistical agency showed. 

 

China Stock Movers 

The Hang Seng index decreased 1.5% to 18,021.19, and the CSI 300 index added 0.1% to 3,475.09. 

Tech stocks led the decline in Hong Kong trading, and financial, industrial, and travel-related stocks were also among the decliners. 

Baidu decreased 6% to HK $93.65, Tencent Holdings dropped 2% to HK $389.20, and Meituan fell 2.4% to HK $118.90. 

Property stocks were also under pressure after property prices continued to decline in June and fixed-asset investment in the sector fell in June. 

China Vanke decreased 2.2% to HK $4.66, China Resources Land declined 3.2% to HK $27.05, and Evergrande Property Services Group fell 4.2% to HK $0.68.