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Hong Kong stock market
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Hong Kong stocks slip as stimulus euphoria triggered by weak China PMI data fades, index up for 4th straight month in May

  • China’s manufacturing PMI for May, a survey of sentiment among factory owners, slipped into contraction territory, official data released on Friday showed
  • The Hang Seng Index posts a four-month winning streak, the longest since February 2021, in spite of Friday’s decline

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Cars travel past a display showing Shanghai and Shenzhen stock indexes near the Shanghai Tower and other skyscrapers at the Lujiazui financial district in Shanghai, China February 5, 2024. Photo: Reuters
Zhang Shidongin Shanghai
Hong Kong stocks fell on Friday as investors took a step back to assess risks surrounding China’s economy as the initial euphoria about policy support hopes in response to weak manufacturing data evaporated. Still, the city’s benchmark advanced 1.8 per cent in May, for a four-month winning streak, the longest since February 2021.
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The Hang Seng Index dropped 0.8 per cent to 18,079.61 at the close, adding to a 3.2 per cent decline over the past three days. The Hang Seng Tech Index slumped 1.7 per cent and the Shanghai Composite Index slipped 0.2 per cent.

The purchasing managers’ index (PMI) of the manufacturing industry, a survey of sentiment among factory owners, contracted in May after remaining in the expansionary zone over the past two months. The gauge slipped to 49.5, below the 50-mark that divides expansion and contraction, China’s statistics bureau said on Friday. The reading fell short of the consensus projection of 50.5 and dropped from April’s 50.4.

“The change in policy stance in the property sector is one step in the right direction, but its impact on the economy is likely to be gradual,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. “The fiscal policy needs to become more proactive to boost domestic demand. So far this year the fiscal policy has been muted, with bond issuance behind schedule.”

This aerial photograph taken on May 15, 2024 shows cars for export waiting to be loaded on the “SAIC Anji Eternity”, a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in eastern China’s Shandong province. Photo: AFP
This aerial photograph taken on May 15, 2024 shows cars for export waiting to be loaded on the “SAIC Anji Eternity”, a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in eastern China’s Shandong province. Photo: AFP

“China’s key comparative advantage, namely that of attracting and retaining the best companies, is changing because of the reluctance of foreign investors to operate in China (unless they are already too dependent on this market) and because Chinese companies have also begun to move overseas,” said Natixis Corporate & Investment Banking in a note.

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