A man stands in front of an electronic board displaying share prices at a securities exchange house in Shanghai, China, (Photographer: Qilai Shen/Bloomberg)

China Stocks Retreat, Yuan Pares Gain as Trade Data Fuel Concern

(Bloomberg) -- Shares in Hong Kong and Shanghai fell and the yuan declined as China’s weakest trade data since 2016 fueled concern about the impact of a dispute with the U.S. and slowing economy.

The Hang Seng Index fell 1.4 percent, ending a six-day run of gains with its biggest loss since Jan. 2. Cnooc Ltd. was the worst performer, falling 4.7 percent, while Tencent Holdings Ltd. weighed on the benchmark with a 2.8 percent loss. The Shanghai Composite Index closed down 0.7 percent. The offshore yuan fell 0.1 percent against the greenback and the onshore rate -- coming off its strongest week since 2005 -- pared most of its early advance.

“The economy isn’t going anywhere and corporate earnings are likely bad, so all investors can do is try and find some speculative trade ideas,” said Shen Zhengyang, a Shanghai-based strategist with Northeast Securities Co. “The market is trapped in a downtrend despite earlier gains, and trading will likely remain light ahead of Chinese New Year.”

China Stocks Retreat, Yuan Pares Gain as Trade Data Fuel Concern

China’s December exports in dollar terms fell 4.4 percent from a year earlier, while imports dropped 7.6 percent. Both were the worst readings since 2016. The data add to evidence of a deepening slowdown as the trade dispute bites, and bring into question the effectiveness of China’s measures to support growth.

Hong Kong’s Hang Seng Index -- after climbing 6.4 percent over six days -- is facing profit-taking pressure, said Ben Kwong, KGI Asia executive director. Developments on Brexit this week and U.S. corporate earnings are also stoking uncertainty, he said.

The yuan rose as much as 0.48 percent against the dollar Monday morning to its strongest since July 19, before paring gains. Goldman Sachs Group Inc. has raised its forecast on the currency, saying it could reach 6.7 per greenback in a year. The yuan traded at 6.7610 Monday afternoon.

Other market news:

  • Prada SpA shares fell as much as 9.8 percent in Hong Kong to the lowest since August 2016.
  • China has doubled the limit of one of the main foreign investment channels into the world’s second-biggest economy.
  • Fang Xinghai, a top official at China’s securities regulator, recommended removing the limit on how much stocks can gain on their trading debuts.
    • Stocks Linked to Futures Jump as Govt Eyes Easier Trading
  • Lenovo surges as much as 6.3% in Hong Kong, biggest intraday gain since Nov. 9, after Goldman Sachs upgraded the stock to buy and raised its price target.
  • China’s CSI 300 Index falls 0.9 percent, with a gauge of health care-related stocks dropping 2.3 percent.
  • The ChiNext gauge of small caps and tech stocks declined 1.2 percent.

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