Hong Kong shares little moved as investors worry about China’s economic recovery stalling amid disappointing economic data

Hong Kong stocks has been hesitant amid China’s disappointing economic data as investors fear the country’s post-Covid recovery is not gaining momentum.

The Hang Seng Index fell as much as 1.4 percent before rebounding to close at 19,978.25 on Tuesday. The technical index was up 0.8% and the Shanghai Composite index was down 0.5%.

Consumer brands recorded losses. Sportswear company Li Ning was down 2.3 percent to HK$50.30, while its counterpart Anta Sports was down 1.2 percent to HK$91. Jeweler Chow Tai Fook lost 2.2 percent to HK$15.28, while instant noodle maker Tingyi fell 2.7 percent to HK$12.80.

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“The economic recovery remains bipolar and market performance may vary between a decent recovery in consumption and deteriorating investment in manufacturing and real estate,” said Gary Ng, senior economist at Natixis.

He added that data from China released on Tuesday showed the country “continues to improve but is weaker than expected”.

According to the National Statistical Office, industrial production in April increased by 5.6 percent. year-on-year, compared with 3.5 percent. in last month. Retail sales rose 18.4 percent year-on-year in April, after rising 10.6 percent in the previous month. Both data points fell below the expectations of economists surveyed by Bloomberg.

“April’s activity data shows that the recovery has stalled, partly because of Beijing’s inability to boost confidence amid worsening geopolitical tensions,” said Nomura economists, led by Ting Lu. “Beijing may need to introduce a new round of support measures in the second half of the year, including lowering benchmark lending rates to spur growth.”

With economic data below expectations, there will be no positive pressure on short-term sentiment, said Kenny Wen, head of strategy at KGI based in Hong Kong. He added that investors are waiting for a more supportive monetary policy of the government.

Meanwhile, Michael Burry, a financial manager known for predicting the 2008 housing crisis, doubled his stake in Alibaba Group Holding to $10 million and tripled his stake in JD.com to $11 million. Both stakes now account for 20 percent of his stock portfolio.

His bets led JD.com up 4 percent to HK$146.80, while Alibaba gained 0.4 percent to HK$85.75. Tencent rose 1.1 percent to HK$344.80, while Baidu jumped 2.8 percent to HK$124.30.

Two companies started trading in China. Chip maker Smarter Microelectronics Guang fell 9 percent to 19 yuan in Shanghai. Metal hardware maker Hwaway Technology jumped 7 percent to 30 yuan in Shenzhen.

Asian markets were mixed. Japan’s Nikkei 225 was up 0.7 percent, Australia’s S&P/ASX 200 was down 0.5 percent, while South Korea’s Kospi was little changed.

This article originally appeared in South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP history, refer to SCMP application or visit SCMP Facebook AND Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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