SHANGHAI - Chinese stocks in Hong Kong fell on March 5 after pledges by China to transform its economy amid stuttering growth failed to impress investors.
China’s leaders vowed to “transform” its economic development model and curb industrial overcapacity while setting an economic growth target for 2024 of around 5 per cent, similar to last year’s goal and in line with analysts’ expectations, according to an official work report released on March 5 as part of this week’s meeting of the annual National People’s Congress.
The Hang Seng China Enterprises Index slid as much as 2.6 per cent, the steepest in more than a month, as technology stocks led decliners. On the mainland, the benchmark CSI 300 Index swung between gains and losses, reflecting market disappointment.
Traders are likely to show some disappointment with China’s targets for gross domestic product growth and budget deficit, said Mr Ng Xin Yao, an investment director at abrdn Asia. “Investors still will like more forceful fiscal measures to boost the economy,” he said. “Government spending, at least based on this, doesn’t seem to provide an added boost to the economy.”
Investors also have been counting on Beijing to address the nation’s property crisis and lay out plans to bolster consumer demand. Policies from the gathering will test the strength of China’s nascent stock market rebound, which had been mostly fuelled by hopes for more support measures.
For the first time since 2019, the work report omitted the slogan that “housing is for living in, not speculation”. The phrase has consistently been used by officials since 2016 as a means to signal Beijing’s intention to cool an overheating market.
A Bloomberg Intelligence gauge of developer shares dropped as much as 2.9 per cent, poised for its fifth straight session of declines.
Also weighing on the Hong Kong market are technology names after Bloomberg News reported that Advanced Micro Devices will need to get a US government licence to sell its powerful AI processors to Chinese customers. The Hang Seng Tech Index lost as much as 4.2 per cent.
Chinese equities had rebounded in recent weeks as a growing list of support measures helped alleviate bearish sentiment that had sent the mainland benchmark CSI 300 Index to a five-year low. The gauge has gained more than 3 per cent so far in 2024. BLOOMBERG
