Stocks Traded Down in Mainland China, Hong Kong Prepares for the Arrival of Typhoon Yagi

Li Chen
06 Sep, 2024
Hong Kong

Stocks in Shanghai and Shenzhen struggled to hold early morning gains, and investors turned cautious on the final trading day of the first week in September. 

Financial markets are closed in Hong Kong after the weather service issued its first severe storm alert of the year as Typhoon Yagi barreled towards Southern China with a maximum speed of 210 kilometers per hour. 

Hong Kong airport was closed and suspended its flight services, and commuter rail services were limited as the authorities prepared for severe weather on Friday. 

For the week, the Hang Seng index declined 3% and nearly wiped out the gains of August, following weak economic data and underwhelming corporate earnings results. 

On mainland China, stocks felt selling pressure as investors stayed on the sidelines ahead of the release of second quarter GDP data in Europe and nonfarm payroll data in the U.S. 

Global investors are on edge after U.S. manufacturing activities contracted for the fifth month in a row in August, and private sector payroll expanded at the slowest pace since January 2021. 

The yuan traded at 7.08 against the U.S. dollar and hovered at a one-year low amid persistent capital outflow and a lack of interest from foreign investors. 

A central bank official signaled that monetary policy easing is likely in the coming months to support economic growth in the second half of 2024. 

A cut in the bank's reserve ratio from the current 7% could increase liquidity and provide more funds for the economy, Zou Lan, the head of the monetary policy department at the People's Bank of China, commented at a press conference in Beijing on Thursday. 

Lan also said there are constraints in lowering deposit and lending rates because lower rates generally drive bank deposits away to asset management products and narrow bank interest rate margins. 

 

China Stock Movers 

The mainland China-focused CSI 300 index declined 0.3% to 3,249.04, and financial markets in Hong Kong were closed because of a typhoon. 

Stock brokerage firms were in focus after China said it plans to merge Guotai Junan with Haitong Securities to create a larger company that can compete with its overseas rivals. 

Beijing plans to create 10 large securities brokerage firms over the next ten years that are capable of competing with the leaders of Wall Street, according to a plan laid out by Wu Quing, the incoming chairman of the China Securities Regulatory Commission. 

The merger plan announcement lifted other leading brokerages higher in Shanghai trading. 

Sealand Securities soared daily limit of 10% to ¥3.19, and China Galaxy Securities jumped 6.6% to ¥11.70.