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Hong Kong market flirts with bear territory as China manufacturing decline erodes investor faith in economic recovery

  • The Hang Seng Index fell but avoided ending the day in bear-market territory
  • China’s official manufacturing index declined to 48.8 in May from 49.2 in April, the statistics bureau said on Wednesday

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Pedestrians walk past Exchange Square, the building housing the stock exchange in Hong Kong, on March 20, 2023. Photo: EPA-EFE
Jiaxing Li
Hong Kong stocks fell but avoided ending the day in bear-market territory after a government report showed manufacturing in China continues to contract, sparking renewed concerns over the nation’s wobbly economic recovery.
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The Hang Seng Index finished down 1.9 per cent to 18,234.27 at the close of Wednesday trading after tumbling as much as 3 per cent during the day. The gauge has declined 19.6 per cent from a January 27 high, just shy of the 20 per cent threshold for bear-market status. The Tech Index retreated 2 per cent, while the Shanghai Composite Index lost 0.6 per cent.

Gaming giant NetEase tumbled 4.9 per cent to HK$132.60, food-delivery platform Meituan fell 5.3 per cent to HK$110.20 and JD.com lost 3.2 per cent to HK$125.90. Property developer Longfor slipped 3.7 per cent to HK$15.06 while peer Country Garden retreated 3.4 per cent to HK$1.44. China’s big three oil giants – PetroChina, Sinopec and CNOOC – slumped by 3.1 to 5.4 per cent on economy worries.

A government report showed the official manufacturing purchasing managers’ index (PMI) declined for a second month to 48.8 in May, China’s statistics bureau said on Wednesday, the lowest level since December last year. The non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 54.5 in May from 56.4 in April.

“The problem is [the recovery] is weaker than expected, meaning the market would need to adjust its assessment,” said Gary Ng, senior economist at Natixis. Global high interest rates and a destocking cycle continue to hit demand, and the pace of the services sector’s recovery is also slowing, showing signs of fatigue, he said.

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