SHANGHAI: China stocks shed early gains to end lower on Friday after sources told Reuters that Beijing will run a budget deficit for 2024 that is lower than expectations, while Hong Kong shares rose on authorities’ decision to support the property market.
The blue-chip CSI 300 Index closed 0.3% lower, and the Shanghai Composite Index lost 0.6%.
Hong Kong’s Hang Seng Index rose 2.4%, booking its biggest daily jump in a month, while the Hang Seng China Enterprises Index advanced 2.3%.
The broad Asian market hit a four-month peak as sharp declines in the US dollar and yields extended the Fed-fuelled rally, but pushback on rate cuts from central banks in Europe may deal a blow to the global pivot hopes.
Chinese leaders agreed at an annual meeting on the economy this week to run a budget deficit of 3% of gross domestic product in 2024, sources told Reuters, a figure lower than this year’s revised 3.8% target, suggesting Beijing wants to maintain fiscal discipline and is not considering a big fiscal bazooka next year.
Following the news, China’s stock benchmark closed down, erasing early gains of 1.1%.
China’s industrial output grew 6.6% in November year-on-year, faster than the 4.6% gain in October, and retail sales rose but missed forecasts, adding to signs Beijing’s recent flurry of stimulus is helping stabilise the economy.
Beijing and Shanghai relaxed home purchase restrictions on Thursday, including by lowering the minimum deposit ratio for first and second homes, suggesting renewed efforts by Chinese authorities to revive the sluggish housing market.
“We continue to expect more housing easing measures in coming months, including more relaxation of home purchase restrictions in large cities, among others,” Goldman Sachs said in a note.
Real estate shares jumped 1.5%, while most other sectors fell.
China’s central bank boosted liquidity injections, but kept the interest rate unchanged when rolling over maturing medium-term policy loans on Friday.
Tech giants listed in Hong Kong closed 2.2% higher, and mainland developers soared 3.8%.