Chinese stocks trading in Hong Kong fell to the lowest level in a week amid waning volumes on concern policy easing is failing to boost economic growth.
Financial and consumer-discretionary companies led declines, with China Minsheng Banking Corp. and Great Wall Motor Co. sliding more than 2 percent. Property developers slumped in Shanghai, with Poly Real Estate Group Co. dropping 4.3 percent after banks’ new lending slumped. Tencent Holdings Ltd. jumped 2.9 percent in Hong Kong after reporting a record profit.
The Hang Seng China Enterprises Index slid 0.6 percent to 13,775.95 at the close in Hong Kong, extending losses to 6.6 percent since reaching a seven-year high last month. The central bank has cut interest rates three times since November amid signs of slowing growth. Data from factory output to retail sales and new lending all trailed estimates, according to official figures released Wednesday.
“We probably still need a few more interest-rate cuts to stabilize growth,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The effect of rate cuts will be gradual and the impact may be seen in a few quarters.”
The Shanghai Composite Index rose 0.1 percent to 4,378.31 at the close. The CSI 300 Index fell 0.4 percent. while the Hang Seng Index lost 0.1 percent. Trading volumes were 21 percent below the 30-day average in Shanghai and down 41 percent in the Hang Seng Index.
After Wednesday’s market close, the central bank released data showing new loans plunged in April, while aggregate financing slid to 1.05 trillion yuan ($170 billion) from March’s 1.18 trillion yuan. M2 money supply also trailed estimates.
“The April monetary data suggest there was a credit crunch to the economy with rising downside risks to the growth outlook, calling for more monetary easing,” Jian Chang, an economist at Barclays Plc, wrote in a report.
Haitong Securities Co. and Citic Securities Co., the biggest listed brokerages, slid at least 2.8 percent in Hong Kong. Dongfeng Motor Group Co. declined 1.7 percent.
Gains for material companies overshadowed losses for developers in mainland trading. A gauge of material shares in the CSI 300 jumped 2.2 percent, the most among 10 industry groups. Inner Mongolian Baotou Steel Union Co. rallied by the 10 percent limit. The Chinese government approved plans to reorganize the nation’s rare earth industry and create 6 large rare earth groups, the Ministry of Land and Resources said. China Vanke Co., the biggest listed developer, slid 0.8 percent.
New share offerings may divert funds from existing equities. Subscription for 20 initial public offerings will probably lock up 2.79 trillion yuan of liquidity starting next week, according to the median estimate of 6 analysts surveyed by Bloomberg. The liquidity lockup will start from May 19 and peak on May 20, China International Capital Corp. analysts including Hanfeng Wang wrote in a report on Wednesday.
Margin traders increased holdings of shares purchased with borrowed money on Wednesday, with the outstanding balance of margin debt in Shanghai climbing for a third day to 1.26 trillion yuan.