Weak data trigger Chinese stocks’ worst day since 2019

CHINA stocks kicked off the year with their worst day since 2019 after a slowdown in manufacturing and home sales.

The CSI 300 index fell 1.3pc in Asian trading as weak data triggered concerns about a “fragile” recovery in the world’s second-largest economy.

The Hang Seng index in Hong Kong sank 1.5pc to 16,788.55 and the Shanghai Composite index dropped 0.4pc to 2,962.28.

It comes after the December survey of the official purchasing managers index, or PMI, in China fell for the third consecutive month to 49, signalling weak demand.

That contrasted with a private-sector survey, by the financial publication

Caixin, which registered a slight improvement in the manufacturing PMI to 50.8, driven by increased output and new orders.

However, it showed that business confidence for 2024 remained subdued.

Christopher Wong, a currency strategist at OCBC, said: “The divergence in manufacturing PMIS highlights how fragile the China recovery story is.”

Analysts at Goldman Sachs said that the divergence in the data is likely to be related to differences in geographic and sector coverage.

However, Caroline Bain, the chief commodities economist at Capital Economics, said she suspects “that the surveys are not reflecting economic reality” which points to “resilient commodity demand”.

She added: “We expect a modest cyclical revival in China’s growth in the first half of 2024, which should be a factor supporting most commodity prices.”

Meanwhile, separate figures showed that the value of new home sales by China’s top 100 developers fell 35pc from a year earlier in December despite moves by regulators to lift limits on such transactions.

Investors began selling property developers such as the debt-laden China Evergrande, which fell 6pc, and Longfor Group Holdings, which lost 6.9pc. Sino-ocean Holding declined 4.6pc.

Traders were unmoved by a televised speech to mark the new year by President Xi Jinping, in which he said the economy had become “more resilient and dynamic”.

Mr Xi said on Sunday that China would consolidate and enhance the positive trend of its economic recovery in 2024 and sustain long-term economic development with deeper reforms.

However, foreign investors sold a net 5.2bn yuan (£576m) of Chinese stocks via the Stock Connect, the biggest daily outflow in more than two weeks.