Hong Kong Stock Market Drops Amid Concerns Over China’s Manufacturing Sector
Hong Kong stocks faced a downturn on Tuesday as investors anticipated disappointing data from China’s manufacturing sector, stoking fears of a deeper economic slowdown. The Hang Seng Index fell 1.2% to 17,023.75 by mid-morning, wiping out much of the previous day’s gains. In parallel, the Tech Index dropped 1.4%, and the Shanghai Composite Index hit a six-month low, declining 0.7%.
The drop in Hong Kong’s stock market is part of a broader regional trend, with major Asian markets also experiencing losses. Japan’s Nikkei 225 dipped 0.5%, Australia’s S&P/ASX 200 fell 0.9%, and South Korea’s Kospi decreased by 1%.
Major Stocks in Focus
Several high-profile companies saw their shares slide. Food delivery giant Meituan fell by 1.1% to HK$107.20, while electric vehicle manufacturer BYD dropped 1.8% to HK$227.20. In the sportswear sector, Li Ning decreased 2.3% to HK$14.16 and Anta Sports Products shrank 1.7% to HK$68.55. Drink producer Mengniu Dairy was one of the hardest hit, with shares tumbling 5.9% to HK$12.70. Hotpot chain Haidilao also saw a notable decline, dropping 2.7% to HK$12.28.
Local property developer Hang Lung Properties, which is set to announce its earnings later today, experienced a 0.5% dip to HK$6.36. Similarly, Standard Chartered’s shares dropped 2.3% to HK$71.60 ahead of its earnings report.
Economic Indicators Signal Trouble
The market’s caution stems from upcoming data expected to show further contraction in China’s manufacturing activities. According to a Bloomberg survey, the PMI manufacturing index is likely to fall to 49.4 in June, down from 49.5 in May. A PMI below 50 indicates a contraction in the sector.
This anticipated contraction highlights the ongoing challenges facing China’s economy, which has already been struggling with tepid policy responses and underwhelming economic fundamentals. As a result, the Hang Seng Index is on track to register its second consecutive month of declines, erasing all of its gains for the year and ranking it among the worst-performing major global markets.
Corporate Earnings and Market Sentiment
Adding to the market’s unease, biotech firm Wuxi Apptec announced a 20% drop in net profit to 4.2 billion yuan amidst intensifying US-China rivalry. However, its shares bucked the overall trend, rising 4.7% to HK$30.10. Wuxi Apptec’s group company, Wuxi Biologics, also saw a 1.7% increase in share price to HK$10.74. Citigroup analysts maintained their target price of HK$90 for the stock, indicating the results were in line with expectations. They noted stable net profit margins and projected revenue growth between 2.7% and 8.6%, which might signal better operational efficiency despite new capacity ramp-up and foreign exchange challenges.
A Gloomy Outlook
Overall, sentiment in the Hong Kong market remains cautious as investors brace for more negative economic data. The sluggish response from Chinese policymakers has not instilled confidence, leading to further investor apprehension. As a result, Hong Kong’s stock market continues to struggle, reflecting broader concerns about the health and direction of the Chinese economy.
For more details about Hang Lung Properties, visit their official website.
