Chinese Stock Indexes Have Had Their Worst Day Since The Start Of The Pandemic
Stock markets in the Asia-Pacific region ended trading in the red on Thursday, with Chinese indexes losing more than 4%, after experiencing the worst day since the start of the coronavirus pandemic. On Thursday afternoon, the state statistical office of the people's Republic of China published data on GDP, industrial production, and retail sales.
The CSI 300 index, which includes the largest listed companies in Shanghai and Shenzhen, fell 4.81%, while the Shanghai Composite and Shenzhen Composite declined 4.5% and 5.2%, respectively. Indicators suffered the strongest losses since February. Hong Kong's Hang Seng fell 2%.
Shares of carmaker Geely Automobile Holdings Ltd. fell by 11.8%, is among the leaders of the fall in trading in Hong Kong. The price of securities of the insurance company China Life Insurance fell by 6.1%, and the operator of exchanges Hong Kong Exchanges & Clearing Ltd. - by 5.7%. The securities of Internet giant Tencent Holdings fell by 5.5%.
Japan's Nikkei 225 index fell 0.76%. The leaders of the fall were shares of Z Holdings Corp., the price of which fell by 4.5%. Stock prices of investment and technology SoftBank Group Corp. decreased by 1.5%.
The value of the South Korean Kospi index decreased by 0.82%.
Australia's S&P/ASX 200 index lost 0.69%.
China's economy grew by 3.2% in the second quarter, returning to growth after a historic 6.8% decline in the previous three months. This decline was the first since quarterly GDP data were published in 1992. Analysts polled by Trading Economics on average expected GDP to increase by 2.5% in the second quarter, Bloomberg consensus forecast expected growth of 2.4%, and respondents to the Wall Street Journal-by 2.6%.
GDP growth relative to the first quarter in April-June was 11.5%, while analysts expected an increase of 9.6%; this is the highest quarterly rise in GDP in history. In January-March, the Chinese economy fell by 9.8% compared to the previous quarter, and the decline in GDP was also recorded for the first time.
China's industrial output in June increased by 4.8% compared to June last year after rising by 4.4% in May.
The indicator coincided with the consensus forecast of Bloomberg and The Wall Street Journal. Analysts polled by Trading Economics, on average, expected an increase of 4.7%. Industrial production growth was recorded for the third month in a row and was the highest since December 2019.
At the same time, retail sales in China in June unexpectedly fell by 1.8% in annual terms after falling by 2.8% a month earlier. Experts, on average, expected an increase of 0.3%. Retail sales fell for the sixth month in a row.
Unemployment in China fell to 5.7% in June from 5.9% a month earlier. Investment in fixed assets in China in January-June decreased by 3.1% to 28.16 trillion yuan.
China has become the first major economy to record growth since the coronavirus pandemic, helped by the reopening of businesses and stores amid the lifting of restrictions imposed in the country to prevent the spread of COVID-19. However, the continued decline in retail sales indicates weakness in consumer spending and the need for further support from the authorities to accelerate the economic recovery, Trading Economics writes.
Pressure on markets may also be exerted by rising tensions between the US and China.