Chinese Stocks Fall With Yuan After Data Show Economy Is Slowing

(Bloomberg) -- Chinese stocks fell along with the currency as data signaled a deepening slowdown in the economy. Losses in equities gathered pace in the afternoon, led by health-care shares.

The CSI 300 Index closed down 1.7 percent and the ChiNext gauge of small caps slid 2.8 percent, while Hong Kong’s Hang Seng Index fell 1.6 percent. The yuan weakened 0.41 percent in offshore trading and the yield on 10-year government debt rose 1 basis point to 3.37 percent.

Industrial production growth in November slowed to 5.4 percent, below all estimates, and retail sales growth decelerated to 8.1 percent, also missing forecasts. Fixed-asset investment picked up.

“The economic data this morning suggest that the Chinese economy will not get better in the near term,” said Castor Pang, head of research at Core Pacific-Yamaichi International. “The market will remain very volatile and closely follow the news flow about the trade talks through the end of this year.”

Chinese Stocks Fall With Yuan After Data Show Economy Is Slowing

Investor sentiment has been fragile amid concerns over the economy and uncertainties over China-U.S. trade relations, contributing to large swings in markets. The Shanghai Composite Index is down 22 percent this year, while the yuan has depreciated more than 5 percent.

Credit growth exceeded estimates in November, according to data from earlier this week, suggesting that recent government measures to increase lending may be starting to take effect.

Telecom and health-care stocks were among the worst performers on the CSI 300 Index, with ZTE Corp. sliding 2.7 percent and Shanghai RAAS Blood Products Co., which is facing the risk of forced sales, tumbling by its daily 10 percent limit for a sixth day. Health-care companies also dropped in Hong Kong amid concern over a clampdown on a medication. CSPC Pharmaceutical Group Ltd. was the worst performer on the Hang Seng Index, losing 12 percent.

Trading was thin in Hong Kong as year-end approaches. Volume on the Hang Seng gauge was 18 percent lower than its 30-day average, according to data compiled by Bloomberg.

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Chen Xiaopeng, analyst at Guohai Securities Co.

Ben Kwong, executive director at KGI Asia Ltd.

  • Investors tend to sell their holdings before a big week. Friday’s economic data reflect the risks of economic slowdown
  • NOTE: China will hold its annual economic policy-setting meeting from Dec. 19 to Dec. 21, according to people briefed on the plans. The Federal Reserve also has its final policy meeting of 2018

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