Shares in Hong Kong and China tumbled on Monday after a disappointing batch of trade and inflation data at the weekend fanned concerns about the mainland economy. The benchmark Hang Seng Index fell 1.75 percent, or 395.56 points, to 22,264.93 on turnover of HK$68.05 billion (US $8.78 billion). Beijing said Saturday it had seen an unexpected trade deficit of $22.98 billion in February.
The figure compared with a surplus of $14.8 billion in the same month last year, and a median forecast of an $11.9 billion surplus. Exports fell 18.1 percent and imports jumped 10.1 percent. "It's hard to ignore a number that looks like that," said Sean Callow, senior currency strategist at Westpac Institutional Bank in Sydney. Those figures were followed the next day by news that inflation eased to 2.0 percent in February, down from 2.5 percent in January, leading to talk of possible deflation, which could delay much-needed investment and consumer spending.
Authorities blame the Lunar New Year break for the weak results, but the data add to growing worries about the Chinese economy, with the latest surveys on its key manufacturing sector showing weakness. The news overshadowed a positive lead from Wall Street after official figures showed 175,000 jobs were created in the United States in February, rebounding from two disappointing winter-battered months, suggesting economic growth is still on track. In Hong Kong, Internet giant Tencent fell 2.22 percent to HK$616.5, while China Mobile dropped 3.20 percent to HK$71.05.
China South City added 8.74 percent to HK$4.73, while CCB dropped 2.10 percent to HK$5.13. Sinopec Corp rose 1.98 percent to HK$6.92. In China the benchmark Shanghai Composite Index dropped 2.86 percent, or 58.85 points, to 1,999.06 on turnover of 95.0 billion yuan ($15.5 billion). The Shenzhen Composite Index, which tracks stocks on China's second exchange, plunged 3.47 percent, or 38.22 points, to 1,064.06 on turnover of 122.5 billion yuan. Airlines were hurt by news that a Malaysia Airlines flight carrying 239 people had gone missing in Saturday as it flew from Kuala Lumpur to Beijing.
"Now that people are worried about safety in the air, stock market investors are losing confidence in relevant travel sectors," Tang Yonggang, an analyst with Hongyuan Securities, told Dow Jones Newswires. China Southern, which sold some tickets for the flight under a code share agreement with Malaysia Airlines, fell 3.49 percent to 2.49 yuan. Air China lost 4.95 percent to 3.46 yuan while China Eastern Airlines dropped 3.56 percent to 2.44 yuan. Travel agencies and hotel operators were also lower. Xi'an Qujiang Cultural Tourism tumbled 7.15 percent to 11.56 yuan and Guangzhou Dongfang Hotel lost 4.83 percent to 6.11 yuan.