The current scenario in China is characterized by a moderate pace of economic expansion, while, at the same time, in Hong Kong, there is a wave of optimism driven by the technology sector. This article analyzes the factors underlying this slight contrast between the markets of the two regions, drawing directly on the most recent data available.
Contrasting performance: China on pause, Hong Kong on the rise
China stocks struggled for direction on Tuesday as the second quarter economic growth slowed, while a tech rally boosted Hong Kong shares, thanks to Nvidia’s NVDA.Oresumption of chip sales to China. At the close, China’s blue-chip CSI300 Index .CSI300 was flat, while the Shanghai Composite Index .SSEC lost 0.4%.
While the slowdown in Chinese growth raises questions about the reliability of the recovery, the rise of technology companies in Hong Kong, which is reflected in more favorable prospects for the sector, maintains high investor interest in Asian assets.
Hong Kong benchmark Hang Seng .HSI climbed 1.6%. Tech giants listed in Hong Kong .HSTECH jumped 2.8%. 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.
The 5.2% growth rate in the second quarter indicates a slowdown from the 5.4% growth rate in the first quarter, but still slightly exceeds consensus projections, demonstrating that the Chinese economy remains resilient despite the slowdown in construction and real estate prices. This continued dynamism helps the market remain attentive to external influences, particularly in the technology sector.
External stimuli and the real estate sector: opposite impacts on growth
Analysts said the U.S.-China trade truce and strong exports helped the world’s No.2 economy avoid a sharp slowdown. Meanwhile, the 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. CSI 300 real estate .CSI000952 dropped more than 1%, among the worst performers in mainland A-shares. The market didn’t move much as there are offsetting data, said Kai Wang, Asia equity market strategist, Morningstar.
Stagnant consumption and resilient exports: the current scenario in China
Despite persistent pressures on consumption and the real estate sector, which still show signs of weakness, exports continue to play a stabilizing role, supported by a trade truce with the United States. This balance of negatives and positives reflects the mixed nature of China’s economic recovery, leaving investors cautiously optimistic about future market performance and growth.
“For the bad news, consumption sales and housing prices, two key areas that required improvement, did not really show us any significant improvement,” Wang 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 .CSI931469, 5G communications .CSI931079 stocks.
Technological advances and exports strengthen Hong Kong stock markets
In Hong Kong, internet giants jumped, with Alibaba 9988.HK and Tencent 0700.HK gaining 7% and 4%, respectively. The latest news is positive for overall sector sentiment, and for Alibaba/Tencent/Baidu 9888.HK /Kingsoft Cloud3896.HK, said Thomas Chong, an analyst at Jefferies.
In short, even with a moderate slowdown in mainland China’s economic growth, the combination of strong export performance, technological advances, and the resumption of sales of highly demanded chips has significantly improved Hong Kong’s markets. This contrast reinforces the importance of monitoring both macroeconomic fundamentals and the capital flows and innovations that shape regional prospects.
GCN.com/Reuters