SHANGHAI: China stocks fell for a fourth straight session on Friday, as a number of weak economic data darkened the world’s second-biggest economy’s recovery prospects. Hong Kong shares also dipped.
China’s blue-chip CSI300 Index slipped 0.6% by the lunch break, while the Shanghai Composite Index declined 0.4%. Hong Kong benchmark index Hang Seng edged down 0.1%.
New Chinese bank loans tumbled far more sharply than expected in April, data showed on Thursday, adding to worries that the economy’s post-pandemic recovery is losing steam.
The weak readings came hours after data showed deflationary pressures were deepening in China, and days after news that imports had contracted sharply.
“Investor sentiment likely remains volatile amid debate over macro recovery strength: Based on our conversations with them, investors remain sceptical about macro recovery momentum, as they see mixed signals pointing towards an unbalanced picture,” Morgan Stanley said in a note.
“Weakness in PMI and import data in April, and the spiking youth unemployment rate in March, have accentuated concerns that macro recovery is losing steam.”
China banking stocks fell, as anaemic loan demand and government guidance toward lower lending costs pushed lenders’ margins to record lows.
Resources and construction engineering stocks also declined on signs of economic softness.
Hong Kong’s tech stocks rose 1.2%, helped by a 7% jump in e-commerce giant JD.com after earnings beat.
Despite disappointing April loan growth, “we expect credit demand to recover further in the rest of 2023”, said Tao Wang, head of Asia economics and chief China economist, UBS.
“Property related credit may stabilise gradually as household income improves and market sentiment stabilises, while consumer credit may recover somewhat thanks to the ongoing consumption rebound.”
“We expect the A-share market to lead in the next phase of the bull market in Asia,” Morgan Stanley said.