HONG KONG: Hong Kong shares tumbled 2.58 percent Monday after another poor reading on Chinese manufacturing activity that highlights ongoing weakness in the world's number two economy.
The Hang Seng Index fell 620.00 points to 23,367.45 on turnover of HK$105.14 billion ($13.57 billion).
China's official Purchasing Managers' Index (PMI) of manufacturing eased to 50.3 last month, lower than the 50.8 seen in October and the weakest since March. A figure above 50 signals expansion in the sector, while anything below indicates contraction.
The figure is the latest pointing to a slowdown in the world's number two economy and follows a surprise move by the central People's Bank of China on November 21 to cut interest rates.
HSBC's final PMI for November came in at the 50.0 break-even point dividing expansion and contraction, matching a preliminary figure released last month.
Adding to worries about the economy, the independent China Index Academy said Sunday that house prices in the country's 100 major cities fell on a monthly basis for the seventh straight month in November.
"The weaker PMI data implies that growth momentum remained weak in November," Nomura economists said in a note. "This helps explain the People's Bank of China's decision to cut benchmark interest rates."
A string of recent data has shown that the Chinese economy is also struggling with soft exports and a weakening property market.
Energy firms slipped further after OPEC's decision to maintain oil output levels despite tumbling prices and an oversupply of the commodity. PetroChina sank 4.4 percent to HK$8.04 and CNOOC lost 5.47 percent to HK$10.72.
However, airlines rallied since fuel accounts for much of their costs. Cathay Pacific was 3.40 percent higher at HK$17.66 and Air China gained 0.50 percent to HK$5.98.
Among other firms HSBC lost 1.23 percent to HK$76.10 and Tencent tumbled 2.98 percent to HK$120.30, while New World Development was off 2.05 percent at HK$9.07.
In mainland China the benchmark Shanghai Composite Index slipped 0.10 percent, or 2.68 points, to 2,680.16 on turnover of 401.1 billion yuan ($65.3 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.55 percent, or 7.76 points, to 1,412.56 on turnover of 279.0 billion yuan.
The Shanghai market spent much of the day in positive territory. But profit-taking added to selling pressure following a nearly eight percent rise last week in response to the surprise interest rate cut, analysts said.
"PMI had some impact," Haitong Securities analyst Zhang Qi told AFP. "The market had some surprising gains earlier, so it's quite normal for investors to take some profits now."
Defence firms led the declines in Shanghai.
Jiangxi Hongdu Aviation Industry dropped 1.86 percent to 26.34 yuan while Hafei Aviation Industry lost 1.71 percent to 36.11 yuan.
Banking stocks fell after the central bank announced plans for deposit insurance, which analysts see as a part of plans for interest rate liberalisation and greater competition in the sector.
In Shanghai, ICBC slid 0.74 percent to 4.01 yuan and Bank of Nanjing tumbled 4.05 percent to 12.79 yuan.
But other Shanghai-listed financial stocks rose. Ping An Insurance Group gained 2.26 percent to 50.75 yuan and Huatai Securities soared by its 10 percent daily limit to 18.54 yuan.
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