Hong Kong Market extends losses after China data

Hong Kong stocks declined for fourth straight session on Monday, 01 November 2021, with the Hang Seng Index closing at three-week low, on signs of deepening slowdown in China's economy after fresh batch of economic data painted a mixed picture of China's manufacturing and service activity.

Meanwhile, selloff was also fueled on caution ahead of the U.S. Federal Reserve's policy meeting on Tuesday, where investors widely expect the U.S. central bank to announce a tapering of stimulus. The Fed's anticipated decision to pare back its massive bond buying could boost the dollar and pressure emerging market currencies.

At closing bell, the benchmark Hang Seng Index fell 0.88%, or 222.92 points, to 25,154.32, hitting the lowest since October 12. The Hang Seng China Enterprises Index dropped 0.7%, or 62.41 points, to 8,899.32.

 

China's economic recovery continued to lose momentum going into the final quarter as manufacturing among larger state-owned groups shrank for a second month in October. China's official manufacturing Purchasing Managers' Index for October came in at 49.2 over the weekend, below the 50 level separating expansion from contraction. It represented the second straight month of shrinking manufacturing activity in the country, following September's official manufacturing PMI reading of 49.6. However, a private survey released Monday showed Chinese manufacturing activity growth in October expanding with the Caixin/Markit manufacturing PMI coming in at 50.6.

Also, activity in China's services sector grew at a slower pace in October as the country combats small-scale COVID-19 outbreaks hitting mainly the north. The non-manufacturing PMI expected to drop much further in November, as Beijing may significantly tighten travel restrictions in coming weeks, in order to contain the current wave ahead of the upcoming Spring Festival travel rush.

Among blue chips, Tencent and Alibaba Group Holding each lost more than 2%, while Meituan retreated 0.8%.

Electric carmaker BYD slumped 3.2% after raising US$1.8 billion from a stock sale amid an earnings setback. Chinese electric-car and battery makers, which reported a 28% drop in third-quarter earnings, sold 50 million shares at HK$276 each.

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