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Updated January 19th, 2024 at 16:53 IST

China, Hong Kong shares decline on lack of stimulus measures

The blue-chip CSI 300 Index slipped by 0.2 per cent, while the Shanghai Composite Index saw a 0.5 per cent decrease.

Reported by: Business Desk
Nikkei
China shares | Image:AP Photo
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Chinese and Hong Kong stocks witnessed a decline, reversing from the slight recovery seen in the previous day from a five-year low. Investors remained cautious due to a lack of substantial stimulus measures and uninspiring economic data.

The blue-chip CSI 300 Index slipped by 0.2 per cent, while the Shanghai Composite Index saw a 0.5 per cent decrease. In Hong Kong, the Hang Seng Index and the Hang Seng China Enterprises Index fell by 0.5 per cent and 0.9 per cent, respectively. All four indexes posted losses for the third consecutive week, ranging from 0.4 per cent to 6.5 per cent.

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Foreign capital exhibited net selling of 22 billion yuan ($3.06 billion) through the Stock Connect's northbound trading link this week. Analysts speculate that China may be intensifying efforts to support the market, as some exchange-traded funds tracking key indexes experienced notable increases in daily turnovers, particularly on Thursday and Friday.

The Huatai-PB CSI 300 ETF, for instance, recorded a surge in daily turnover to over 12 billion yuan on Friday, following Thursday's highest daily turnover since 2015 at 15 billion yuan. UBS highlights that MSCI China is currently trading at a historic discount compared to MSCI World and MSCI Emerging Markets indexes. UBS analysts suggest that equity investors seem to be pricing in a more pessimistic outlook for the domestic economy compared to investors in other markets, presenting an attractive risk-reward scenario at the current level.

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Value Partners, a fund manager, anticipates a recovery in China's economy starting in the second quarter of this year. Kelly Chung, investment director at Value Partners, mentions, "We expect the market to be bottoming, with some funds starting to reposition for a U-shape rebound this year."

The photovoltaic industry and the internet finance sector were among the worst decliners, dropping 2.3 per cent and 2.2 per cent, respectively. Conversely, stocks related to Apple's supply chain, such as Foxconn Industrial Internet (up 3.6 per cent) and Luxshare Precision Industry (up 2.2 per cent), witnessed gains. However, tech giants listed in Hong Kong collectively declined by 1.5 per cent.

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(With Reuters inputs)

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Published January 19th, 2024 at 14:43 IST

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