China, Hong Kong stocks fall on concerns government stimulus inadequate

05/18/2022 | 01:06am

SHANGHAI, May 18 (Reuters) - China and Hong Kong stocks fell on Wednesday after a recent recovery, as investors were worried that policies announced by Beijing are inadequate to reinvigorate the coronavirus-battered economy.

** China's bluechip index CSI300, which had bounced more than 6% from a April 27 low, fell 0.6% by the midday break. The Shanghai Composite Index lost 0.4%. In Hong Kong, the benchmark Hang Seng Index dropped 0.6%.

** The market had rebounded on signs China was rolling out more stimulus to aid an economy ravaged by the country's biggest Covid-19 outbreak in two years.

** Chinese Vice-Premier Liu He soothed tech sector's nerves on Tuesday, saying the government supported the development of the sector and public listings for technology companies.

** The Hang Seng Tech Index, which had jumped roughly 14% over the past week in expectation of the meeting, dropped 1.7% on profit-taking on the lack of detailed support measures.

** Property shares , which also rebounded on signs of policy easing, also fell on gloomy April data.

** "Housing prices dropped in more cities in April. The sector is going through a crisis," Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said.

** "The government policy has turned more supportive but not overwhelmingly so ... It is not clear when the housing sector will rebound."

** In its mid-year outlook, Morgan Stanley said it expects China's 2022 growth to come in at a below-target 5.2%, with the drag from COVID-zero strategy "only partially offset by broad-based easing" as signaled in the Politburo meeting.

** Sentiment was further doused after data showed foreign investors cut their holdings of Chinese yuan-denominated bonds for the third consecutive month in April, the longest such stretch on record.

** China's STAR50 index, home to Chinese chipmakers and high-end manufacturing firms, rose 0.4%. (Reporting by Shanghai Newsroom; Editing by Rashmi Aich)

© Reuters 2022
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