Shares in Shanghai and Hong Kong fell on Thursday after a weak mainland debut for Agricultural Bank of China cast doubts over investor appetite for mainland bank shares ahead of major fundraising plans. Worries about slowdowns in the US and Chinese economies also weighed on sentiment, even though China's growth rate continues to be in the double digits.
Data early in the day showed China's rapid economic growth cooled somewhat in the second quarter, as expected, and analysts believe it will moderate further over the rest of the year. The Shanghai Composite Index fell 1.9 percent to a two-week low at 2,424.3 points, while Hong Kong's Hang Seng Index ended 1.5 percent lower at 20,255.62, with shares of Chinese banks dragging on both markets.
AgBank shares closed 0.75 percent higher, much less than the first-day jumps enjoyed by its rivals, after what is expected to be a record $22 billion IPO. Analysts had expected it to rise up to 5 percent. Gray market indications suggested a 2-3 percent gain for the bank's Hong Kong debut on Friday, according to electronic trading network Instinet.
Shares of Industrial & Commercial Bank of China fell 2 percent in Hong Kong and 1.7 percent in Shanghai, while China Construction Bank Corp fell over 2 percent in both markets. ICBC is planning a rights issue in Shanghai and Hong Kong to raise up to $6.6 billion, while CCB is pressing ahead with an $11 billion fundraising.
Property developer Henderson Land fell 2.1 percent after Hong Kong police raided the company's headquarters as part of an investigation into the group's aborted sale of luxury apartments. Market turnover remained thin as appetite for riskier assets weakened after the US Federal Reserve suggested additional measures may be needed to combat a weakening economy. Adding to worries that the US recovery may be stalling, retail sales fell more than expected in June. China's annual GDP growth eased to 10.3 percent in the second quarter from 11.9 percent in the first quarter, slightly below analysts' expectations for 10.5 percent growth.
Other data suggested curbs on lending to home buyers and local authorities, an ebbing of government stimulus spending and an end to inventory rebuilding were biting with greater force as the quarter drew to a close. China's stock market is one of the world's worst performers, down about 25 percent this year, second only to that of debt-laden Greece, after Beijing unveiled a range of steps to cool the mainland's red-hot property sector.