SHANGHAI: China and Hong Kong stocks dropped on Friday as investor sentiment remained subdued amid a lack of concrete stimulus to boost consumption and support a troubled real estate sector.
China’s blue-chip CSI300 Index closed down 1.2%, while the Shanghai Composite Index lost 1%. Hong Kong’s benchmark Hang Seng Index was down 2.1%.
For the week, CSI300 Index was down 1.3%, while the Hang Seng Index lost 5.9%, marking the worst week in five months.
Data for July and policy announcements this week have disappointed investors, who were expecting stronger policy measures than just a rate cut.
Foreign capital recorded a net outflow via the northbound trading link for the 10th consecutive session. This week has seen more than 29 billion yuan ($3.98 billion) capital outflow, marking the worst weekly outflow in 10 months. Two pain points in China’s growth recovery highlighted by the July activity data are the real estate sector and stalled consumption recovery amid rising unemployment, analysts at Barclays said in a note.
China Evergrande, which is the world’s most heavily indebted property developer and became the poster child for China’s property crisis, on Thursday filed for protection from creditors in a US bankruptcy court.
Meanwhile, Country Garden’s liquidity crisis has stirred up fears among other developers.
Shares of Longfor, considered one of the most resilient private developers, have shed 30% from its peak in July.
Tech stocks listed in Hong Kong extended their downtrend with a 3.6% drop.
Performances of China’s securities stocks were seen as divergent. Industry leaders such as China International Capital Corporation and Huatai Securities rose, while most other firms declined.
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