HONG KONG: China stocks dropped on Tuesday, while Hong Kong shares inched higher, as China’s economy slowed in the second quarter despite beating market forecasts, with persistent property sector weakness weighing on sentiment.
China’s blue-chip CSI300 Index fell 0.5% by the lunch break, while the Shanghai Composite Index lost 0.9%.
Hong Kong benchmark Hang Seng was up 0.2%, and Hang Seng Tech Index rose 0.4%.
Data showed China’s gross domestic product grew 5.2% in the April-June quarter from a year earlier, slowing from 5.4% in the first quarter, but just beating analysts’ consensus expectations of a 5.1% rise in a Reuters poll.
Analysts said the U.S.-China trade truce and strong exports helped the world’s No.2 economy avoid a sharp slowdown.
property downturn remained a drag on overall growth, with investment in the sector falling 11.2% year-on-year in the first six months.
In June, China’s new home prices fell at the fastest monthly pace in eight months, highlighting the weak demand.
China stocks gain on pickup in exports
CSI 300 Real Estate dropped 2%, while Hong Kong listed mainland developers declined 1.9% to lead the decline.
Market didn’t move much as there are offsetting data, said Kai Wang, Asia equity market strategist, Morningstar.
“For the bad news, consumption sales and housing prices, two key areas that required improvement, did not really show us any significant improvement,” Wang said.
However, U.S. tariffs have not affected China’s overall economy as feared thanks to resilient export data, he added.
Meanwhile, the news that Nvidia will resume sales of its H20 artificial intelligence chip to China lifted cloud computing, 5G communications stocks.
Goldman Sachs analysts said policymakers are unlikely to launch broad-based, significant stimulus at the July Politburo meeting, but they may implement incremental, targeted easing to help stem the property downturn and mitigate labor market pressures in the second half.