China Markets Extend Weekly Losses Amid Weak Domestic Demand and Earnings Outlook

Li Chen
26 Jul, 2024
Hong Kong

Stock market indexes in Shanghai and Hong Kong continued to look down amid weak market sentiment ahead of the Politburo meeting later in the month. 

The Hang Seng index and the CSI 300 index dropped 0.2%, and both indexes are set to extend weekly losses for the second week in a row. 

For the week, the Hang Seng index fell 2.4% and the CSI index dropped 3.4%. 

The People's Bank of China unexpectedly cut its one-year loan prime rate, the reference rate for property mortgage lending, by 10 basis points on Thursday. 

The surprise move underscored the need to support the fragile economic recovery with additional measures as the world's second-largest economy struggles to achieve the government's annual economic growth target rate of 5%. 

China's policymakers are showing little interest in supporting the property market rebound amid widespread overbuilding and shoddy construction. 

Policymakers are looking to provide assistance to companies pursuing advanced manufacturing, renewable energy, and modernizing military capabilities. 

With the shift in focus, Chinese leaders are not likely to announce financial market supportive measures, which requires additional spending, as the government is struggling with record high debt of 300% of gross domestic product, the highest among leading economies of the world. 

 

China Stock Movers 

The Hang Seng index increased 0.2% to 17,036.73 and the CSI 300 index rose 0.2% to 3,406.96. 

Tech and e-commerce stocks were in focus and traded volatile as investors worried about the upcoming earnings in the next few weeks. 

Tencent Holdings increased 1.3% to HK $354.80, Baidu decreased 1.1% to HK $87.79, Alibaba Group decreased 0.1% to HK $73.25, and Meituan added 0.7% to HK $107.80. 

BYD increased 1.2% to HK $237.0, and Li Auto jumped 1.4% to HK $74.20. 

Ugreen Group doubled on the first day of trading in Shenzhen to 42.50 yuan, and the consumer products company raised 1.5 billion yuan.