Hang Seng Index Extended 5-day Rally, Mainland China Indexes Struggled Amid Weak Earnings Outlook

Li Chen
13 Aug, 2024
Hong Kong

Benchmark indexes in Shanghai and Hong Kong struggled to advance amid ongoing economic growth worries and mixed corporate performance. 

The Hang Seng Index added 0.2%, but the CSI 300 index edged down 0.2% as investors awaited the release of a flood of economic data later in the week. 

The Hang Seng index extended gains for the fifth session in a row, and the benchmark index rebounded but hovered near its three-month low. 

Moreover, trading contracted on the Hong Kong Stock Exchange, and stock trading volume dropped to a six-month low of HK $70.3 billion or US$9 billion on Monday, according to the data available from the exchange. 

China's statistics bureau is scheduled to release retail sales, industrial output, fixed asset investment, and home price data later in the week. 

Market sentiment has been cautious after consumer price inflation advanced for the sixth month in a row in July, but producer price inflation declined for the 22nd month in a row, confirming the deflation trend. 

Investors are also worried that the recent gains in exports may come to a halt in the second half as punitive tariffs kick in in the U.S. and Europe, contributing to the economic slowdown in the period. 

 

China Stock Movers 

The Hang Seng index increased 0.3% to 17,155.99, and the CSI 300 index fell 0.2% to 3,320.61. 

Tencent Holdings jumped 1% to HK $378.60, and the diversified Internet services provider is scheduled to release its earnings on Wednesday. 

Investors are estimating earnings to jump more than 50% in the second quarter compared to a year ago. 

Country Garden Services decreased 5.5% to HK $4.44, and the company said profit in the first half declined 37% from a year ago to 1.7 billion yuan, or $237 million. 

Country Garden Services estimated first-half revenue between 20.9 billion yuan and 21.2 billion yuan and net income between 1.47 billion yuan and 1.65 billion yuan. 

The company said it lowered its revenue estimate because of property market weakness and reduced investment income. 

Despite the current market weakness, the company expects over $12.2 billion in cash reserves at the end of the first half, as it plans to tighten its risk management and cut costs to improve profitability.