Hong Kong stocks little changed as investors worry over stalled China recovery amid disappointing economic data

Hong Kong stocks fluctuated amid disappointing China economic data as investors worry the nation's post-Covid recovery is failing to gather steam.

The Hang Seng Index fell as much as 1.4 per cent before recovering to close little changed at 19,978.25 on Tuesday. The Tech Index added 0.8 per cent and the Shanghai Composite Index slipped 0.5 per cent.

Consumer brands led losses. Sportswear company Li Ning fell 2.3 per cent to HK$50.30, while its peer Anta Sports retreated 1.2 per cent to HK$91. Jeweller Chow Tai Fook lost 2.2 per cent to HK$15.28, while instant noodle producer Tingyi fell 2.7 per cent to HK$12.80.

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"Economic recovery remains bipolar, and the market performance may diverge between the decent consumption recovery and the deteriorating manufacturing and property investment," said Gary Ng, senior economist at Natixis.

China data released on Tuesday showed the nation was "still improving but weaker than expected", he added.

Industrial production in April rose 5.6 per cent year on year, up from 3.5 per cent in the previous month, according to the National Bureau of Statistics. April retail sales jumped 18.4 per cent year on year, following the previous month's 10.6 per cent increase. Both data points came lower than the expectations of economists surveyed by Bloomberg.

"April's activity data show that the recovery has stalled, due partly to Beijing's inability to boost confidence amid worsening geopolitical tensions," said Nomura economists, led by Ting Lu. "Beijing may have to introduce a new round of supportive measures in the second half of the year, including cutting benchmark lending rates to bolster growth."

With the economic data below expectations, there will be no positive pressure on short-term sentiment said Kenny Wen, KGI's head of strategy based in Hong Kong. Investors are waiting on more supportive government monetary policies, he added.

Meanwhile, Michael Burry, the money manager famous for predicting the 2008 housing crisis, has doubled his holdings in Alibaba Group Holding to US$10 million and tripled his stake in JD.com to US$11 million. Both holdings now account to 20 per cent of his stock portfolio.

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

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

Asian markets were mixed. Japan's Nikkei 225 climbed 0.7 per cent and Australia's S&P/ASX 200 slipped 0.5 per cent, while South Korea's Kospi was little changed.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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