Hong Kong Market falls on downbeat GDP data

The Hong Kong stock market closed down on Friday, 18 October 2019, snapping two days of gains, as weaker-than-expected GDP growth deepened worries over the health of the world's second largest economy. At closing bell, the benchmark Hang Seng Index declined 0.48%, or 128.91 points, to 26,719.58. The Hang Seng China Enterprises Index dropped 0.45%, or 48.13 points, to 10,540.45. For the week, the Hang Seng Index rose 1.5%, thanks largely to the Hong Kong government's new policies aimed at promoting home ownership, announced on Wednesday.

Downbeat Chinese data in recent months has highlighted weaker demand at home and abroad. China Gross domestic product (GDP) expanded 6% in third quarter ended September 2019, compared with 6.2% in the second quarter, official figures showed on Friday, as the country grapples with protracted trade war with the US and slowing domestic demand. The Chinese economy grew at 6.6% in 2018. However, the Industrial Production rose 5.8% year-on-year in September, after growth of 4.4% in August. Meanwhile, consumer spending, as represented by Retail Sales, rose 7.8% year-on-year in September.

Investors were beginning to fear that GDP growth, which has fallen in every quarter since beginning this year, is reflecting the fact that the various economic stimulus and supportive monetary measures launched by the government and central bank are having a limited effect.

Britain and the European Union agreed to a severance deal, moving closer toward wrapping up three years of uncertainties after Britons voted to leave the bloc. The deal comes after years of divisive and frequently acrimonious discussions with the EU, including successive days of late-night talks this week.

At a news conference with Prime Minister Boris Johnson, European Commission President Jean-Claude Juncker said the deal meant there would be no need for a further delay to Britain's departure and negotiations on the future relationship between Britain and the EU would begin as soon as the deal was approved by the UK and European parliaments.

On the U.S.-China trade front, White House economic adviser Larry Kudlow's commented that he sees momentum to finalize the initial phase of a U.S.-China trade deal outlined last week, adding it may be signed at the APEC forum next month. China hopes to reach a phased agreement in the trade dispute with the United States and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars had no winners. Upbeat statements from Beijing and Washington fueled hopes that a phased agreement could ease the long-running U.S.-China trade war that has rattled markets for months.

Blue chips were mixed and little changed. HSBC (00005) was unchanged at HK$60.9. HKEX (00388) added 0.5% to HK$238.2 after both Goldman Sachs and HSBC Research raised their target prices for the stock exchange operator. Tencent (00700) was steady at HK$331. China Mobile (00941) rose 0.2% to HK$66.15. AIA (01299) nudged down 0.5% to HK$75.35.

Shares of construction firms and banks succumbed to losses on profit booking. Link Reit (823 HK) dropped 2.4% to HK$83.1, Sino Land (83 HK) lost 1.6% to HK$12.1, Henderson Land (12 HK) fell 1.7% to HK$38.1 and New World Development (17 HK) gave up 0.9% to close at HK$11.08. China Construction Bank (939 HK) lost 0.5% to HK$6.28, Industrial and Commercial Bank of China (1398 HK) slid 1.1% to HK$5.42 and insurer AIA (1299 HK) dropped 0.5% to HK$75.35.

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