SHANGHAI: China and Hong Kong stocks fell on their first trading session of 2025, hurt by weaker-than-expected Chinese factory activity data, while investors awaited more policy support.
Chinese stocks post first annual gain since 2020
China’s blue-chip CSI 300 Index dropped 1.4% by the lunch break, while the Shanghai Composite Index lost 1.1%. Hong Kong benchmark Hang Seng was down 1.5%.
China’s factory activity grew in December but at a slower-than-expected pace, missing investors’ expectations, as overall sales were dampened by falling export orders amid concerns over the trade outlook, a private-sector survey showed.
Chinese stocks registered their first annual gain in 2024 following an unprecedented three-year decline, as a package of stimulus policies lifted investor sentiment.
“The equity market’s performance will largely depend on the strength of upcoming policies,” said analysts at Huaxi Securities in a note.
“Uncertainties surrounding potential tariff increases by the Trump administration could affect exports. Boosting domestic demand remains crucial for fundamental recovery.”
Many market participants expect the market will lack clear direction until the National People’s Congress in March, where the government’s growth target and stimulus measures will be announced.
China’s central bank kicked off a second round of operations this week under a newly-created funding scheme for financial institutions to aid the country’s stock market.
On Thursday, financial and tech shares led the declines, falling 1.8% and 2.6% respectively.
Real estate stocks retreated 0.7%, despite prices of new homes in China rising at a slightly faster pace in December.
Small stock index CSI 2000 was one of the few bright spots, up 0.6%, as retail investors often favour small stocks for potentially quick gains despite the risks involved.
Hypermarket chain Sun Art shares were down nearly 17%, after Alibaba said on Wednesday it had agreed to sell its majority stake in the company to Chinese private equity firm DCP Capital. Alibaba stocks slipped 0.7%.
Tech giants traded in Hong Kong were down 1.5%.