Hong Kong stocks cautious after China data disappoints, awaiting policy support

From South China Morning Post: 2024-06-17 22:55:35

Hong Kong stocks slipped, with the Hang Seng Index down 0.2% and the Hang Seng Tech Index falling by the same margin. Despite weak economic data, the PBOC kept rates steady, hinting at potential future support measures to boost the economy.

Analysts anticipate the Chinese government will enact more policy support, potentially via rate cuts or other measures. The timetable for these actions could be after the July Politburo meeting, as the real estate market faces continued pressure and economic data disappoints.

In a move to enhance trading liquidity, Hong Kong will now allow trading to continue during typhoons and heavy rains starting September 23. This change ends a more than 70-year-old practice of halting trading during adverse weather conditions, as authorities seek to improve operational efficiency in the market.

Investors are cautious following China’s anti-dumping investigation on EU pork imports and the EU’s decision to raise tariffs on Chinese EVs. Berkshire Hathaway reduced its stake in Chinese EV maker BYD ahead of the tariffs, with shares of Zijin Mining Group also declining amidst a convertible bonds and shares sale.

Zijin Mining Group’s proposed sale of convertible bonds and shares to raise $2.5 billion follows a trend of Chinese firms taking advantage of lower borrowing costs. S&P Global Ratings views these instruments as credit negative in the short term but potentially credit positive over the long term if conversion occurs successfully. Wuhan Youji Holdings saw an 80% jump on its trading debut.



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