China, Hong Kong stocks wobble; focus on stimulus

CHINA stocks closed flat on Wednesday (Jul 19), while Hong Kong shares dipped, with frail economic data continuing to weigh on sentiment as investors wait for meaningful stimulus as the next catalyst.

China’s blue-chip CSI 300 Index edged down 0.11 per cent, while the Shanghai Composite Index ended flat.

Hong Kong’s Hang Seng Index dropped 0.33 per cent, and Hang Seng China Enterprises Index was slightly down 0.28 per cent.

Actualized foreign direct investment into China shrank by 2.7 per cent year-on-year to 703.65 billion yuan (S$129.2 billion) in the first half of the year, the commerce ministry said.

China’s fiscal revenue grew 13.3 per cent in the first six months of 2023 from a year earlier, slower than a 14.9 per cent rise in the first five months, finance ministry data showed.

“With one weak print after another, economic surprises in China have cratered, fueling calls for more than marginal policy stimulus,” BofA Securities said in its July Asia Fund Manager survey.

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According to the survey, an overwhelming 81 per cent of participants were looking for monetary easing to kick in. Meanwhile, eight in 10 investors sided with a structural de-rating view for China equities.

Yet some sell-side analysts are more positive. Hong Kong stocks’ valuations are still well below their five-year averages while the outlook for earnings growth in 2023 is good, HSBC analysts said in a note, expecting a turnaround of Hang Seng index in the second half of the year.

Hang Seng Tech Index fell for a third session in a row, losing 0.4 per cent.

In mainland A-shares, photovoltaic firms dived 1.4 per cent to lead the declines, while real estate firms jumped 1.6 per cent.

Separately, China’s top diplomat Wang Yi met with veteran US diplomat Henry Kissinger in Beijing on Wednesday, the Chinese foreign ministry said in a statement. REUTERS