Hong Kong stocks end flat amid doubts China’s retail sales data recovery will be sustained
- China’s industrial production slowed to 5.6 per cent in May from 6.7 per cent in April, but retail sales in May posted a 3.7 per cent increase, higher than April’s 2.3 per cent
Hong Kong stocks ended flat on Monday, surrendering their gains posted after China’s retail data provided a bright spot in an otherwise uninspiring set of economic numbers, with caution also prevailing amid heightened trade tensions with the European Union (EU).
The Hang Seng Index closed virtually unchanged at 17,936.12, following an increase of as much as 2 per cent in morning trade. The Hang Seng Tech Index inched up 0.1 per cent while the Shanghai Composite Index dropped 0.6 per cent.
But the boost from retail data proved to be short-lived as analysts said the gains were primarily on account of temporary factors.
“We do not think the recovery in retail sales will be sustained, given fading one-off boosts, a deteriorating labour market, and financially constrained households,” said Barclays analysts in a note. “High frequency data also show domestic tourism consumption losing momentum during the Dragon Boat holiday (8-10 June).”
During the afternoon decline, mainland property stocks became one of the main factors dragging down the market, according to Kenny Ng, a strategist at Everbright Securities International. “This reflects the relatively weak performance of fixed asset investment in today’s data, in which property investment recorded a 10 per cent drop.”
Chinese developer Longfor Group Holdings slipped 3.4 per cent to HK$11.94.
