(Bloomberg) — Hong Kong-listed Chinese shares started the week lower as lingering concerns over the health of the property sector fueled optimism amid signs of stability in some other parts of the economy.
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The Hang Seng China Enterprises Index slipped as much as 1.7 percent before paring some losses. On the mainland, the CSI 300 index fell 0.4% to its lowest level this year before trading. A benchmark of real estate stocks fell more than 2 percent. Beleaguered Chinese developer Country Garden Holdings Co. faces two more challenges on Monday: an early deadline to pay interest on its dollar-denominated bonds and a vote on the lender’s request to extend repayments on yuan notes.
Monday’s price action comes despite encouraging recent economic data and Beijing taking a series of market measures to revive investor confidence. Still, foreign funds sold offshore Chinese stocks on a net basis for six straight weeks. Increasingly, their divestment from domestic assets is diminishing the market’s reputation for international portfolios and accelerating its linkages with the rest of the world.
Read: Chinese shares set to trade at a steep premium over HK counterparts
The CSI 300 index fell 0.7% on Friday as foreigners sold after estimates of retail sales and industrial production data for August.
“Although the economic data shows some recovery, the main issue for the market at the moment is property, and despite measures to promote sales, the recovery of prices and volumes seems to be limited to large cities,” Yang Xiong said. Fund manager of Beijing Gemchart Asset Management Company
China’s economic slowdown after years of Covid-19 restrictions, a crisis in its property market and ongoing tensions with the West have weighed on the stock market. The concerns helped make “avoid China” one of the biggest themes among global fund managers in a recent Bank of America survey.
Meanwhile, the continued losses are causing some local investors to hope that their arrogance has peaked. In the year Down more than 7 percent in 2023, the MSCI China index is staring at its third straight year of losses, its longest losing streak in more than two decades.
“We met with investors in Beijing and Shanghai last week, and many of them said: ‘There is no need to be more bullish at the current level,'” BofA strategists including Winnie Wu wrote in their report. And the most bullish investors we’ve met expect a 3-6 month rally.
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–With assistance from John Cheng.
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