(Bloomberg) — Chinese stocks fell after traders returned from a long weekend, as a series of negative developments weighed on sentiment.
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The CSI 300 index of mainland stocks fell 1.4% after markets reopened following the Dragon Boat Festival holiday. The index of Chinese stocks listed in Hong Kong was among the biggest decliners in Asia, falling as much as 2%.
The decline came as weak travel spending and renewed worries about the real estate sector heightened concerns about the sustainability of China’s economic recovery. Geopolitical risks weighed on shares of electric vehicle makers as traders awaited the European Commission’s decision on interim duties expected this week.
“The recent holiday weekend was not marked by as strong consumption as the previous May golden week, and weekly property sales are weak although they are also volatile,” said Xin-Yao Ng, investment director at abrdn. “These follow previous weak macroeconomic numbers, such as the NBS PMI and imports,” he said.
While domestic tourism spending increased 8.1% year over year over the long weekend, the trend showed a slowdown compared to other recent short vacations, according to Citigroup Inc. Average spending per traveler remained moderate, analysts Brian Gong and Alicia Yap wrote in a report. note, weighing on travel-related stocks including Changbai Mountain Tourism Co.
Authorities’ recent focus on stabilizing the property market has failed to improve sentiment, with Dexin China Holdings Co. becoming the latest builder to be liquidated. Promoter shares entered a technically bearish market last week, amid skepticism over the broad support package unveiled by the central government.
China’s nascent stock market rally is losing momentum, with a gauge of companies listed on the Shanghai Stock Exchange poised to fall below a key psychological level for the first time since late March on a closing basis.
Traders expect stronger measures to support the market after recent efforts fell short of expectations. They will also focus on the upcoming third plenum, a closed-door conclave in July, for signals of potential policy pivots and future measures to stabilize the slowing economy.
(Updates with more details starting in the fifth paragraph.)
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