China stocks in HK drop during growing economic strains

BLOOMBERG

Chinese stocks in Hong Kong tumbled as disappointing trade data added to investor concerns about the strength of the economic recovery and as worries about the real estate sector intensified. The Hang Seng China Enterprises Index slid 2.2% to close at its lowest in almost two weeks. A Bloomberg Intelligence gauge of property developers plunged more than 4% intraday, led by Country Garden Holdings C, after the company’s bondholders said they haven’t received coupon payments effectively due Monday.
The boost China stocks received after Beijing showcased its determination to shore up the economy at the Politburo meeting at the end of July is fading fast. Foreign investors, who piled into shares onshore following the event, are selling again as economic data point to more weakness and the effects of pro-growth policies remain to be seen.  Data due on Wednesday will likely show consumer prices declined in July, which would be the first time since late 2020 that both consumer and producer prices register contractions.
“Deflation is a significant risk that reflects weak demand and it will impact earnings for corporate China,” said Marvin Chen, an equities strategist at Bloomberg Intelligence.
“The upside is that the weaker inflation numbers leave the door open for more monetary easing.” China’s exports — a strong growth engine that supported the economy during the pandemic — fell for a third straight month in July. Imports also plunged. Both figures were worse than what economists polled by Bloomberg had expected. Separately, data on Tuesday also showed passenger vehicle sales dropped last month.
Overseas funds were net sellers of 6.8 billion yuan ($945 million) via trading links  with Hong Kong in Tuesday’s session, the highest since July 18. They sold shares worth 2.5 billion yuan the previous day. The onshore CSI 300 Index  fell 0.3%.