SHANGHAI- China stocks edged up on Monday as investors bet on more stimulus after the economy slowed more than expected in the second quarter amid a protracted property downturn and worries about jobs.
Hong Kong shares fell, however, following the weaker-than-expected data, as well as concerns of a higher probability of Donald Trump winning US elections after a surprising attack.
Some market participants placed high hopes on a key leadership gathering this week that starts on Monday.
China’s CSI 300 Index gained 0.2 percent , while Hong Kong’s Hang Seng Index lost 1.4 percent by the midday break.
The economy grew 4.7 percent in April-June, official data showed, its slowest since the first quarter of 2023 and missing analysts’ forecast of 5.1 percent growth in a Reuters poll.
“The disappointing second-quarter economic growth in China, which is the first set of quarterly data that is free of distortions by the pandemic, will add pressure on the Chinese government to boost confidence,” Vasu Menon, managing director of investment strategy at OCBC.
China’s economic growth has been uneven this year, with industrial output outstripping domestic consumption, fanning deflationary risks amid the property downturn and mounting local government debt.
Tech giants listed in Hong Kong slumped 2.4 percent , while mainland property developers plunged 2.6 percent . In mainland markets, the tech-focused ChiNext Composite Index lost 1 percent , while energy shares went up 1.6 percent .
“We wouldn’t say the 5 percent full-year target is out of reach for now. But more support will be necessary… probably via monetary policy. There could be further short-term rate cuts,” said Woei Chen Ho, economist at UOB.
With business, employment and consumer sentiment near record lows, the ongoing four-day plenum will seek to inject confidence in the economy. However, conflicting goals such as boosting growth while cutting debt may mean little progress toward implementing change.
“The market will place a high hope on the third plenum this week. Unfortunately, the structural-oriented party convention is unlikely to unveil counter-cyclical measures,” said Zhaopeng Xing, senior China strategist at ANZ.
