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Financials

China stocks close lower on dire economic activity data; Hong Kong edges up

(Updates with closing Hong Kong levels)

SHANGHAI, May 16 (Reuters) - China stocks ended down on Monday after data showed the country’s economic activity had cooled sharply in April due to COVID-19 lockdowns, with investors looking past Shanghai’s June reopening plan and a home-loan rate cut for first-time buyers.

The blue-chip CSI300 index fell 0.8% to 3,956.54, while the Shanghai Composite Index was down 0.3% at 3,073.75.

The Hang Seng index rose 0.3%, to 19,950.21, while the China Enterprises Index gained 0.3%, to 6,826.31 points.

** China’s April retail sales plunged 11.1% versus a year earlier, almost twice the projected drop, while industrial output fell 2.9%, compared with analysts’ forecast for a slight increase.

** Data on Friday showed new bank lending in China hit its lowest level in nearly four-and-a-half years in April, as the pandemic jolted the economy and weakened credit demand.

** Shanghai set out plans for a return of more normal life from June 1 and for the end of a painful COVID-19 lockdown that has lasted more than six weeks.

** To prop up the property sector, the central bank cut the lower limit of interest rates on home loans for first-time purchasers by 20 basis points, based on Loan Prime Rates.

** “Although we expect this cut to provide a benefit, the positive impact could be quite limited, as stringent anti-COVID-19 measures appear set to continue for an unspecified time,” Nomura analysts said in a note.

** “We expect more policy actions to follow in the next few months,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

** China’s central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Monday, and some banks expect the lending benchmark Loan Prime Rate could be lowered at the monthly fixing on Friday.

** China’s property sales in April fell at their fastest pace in around 16 years. Meanwhile, sources told Reuters three leading Chinese property developers, Country Garden, Longfor Group and Midea Real Estate, had been asked by authorities to issue bonds this week.

** Property developers gained 1.5% and energy shares rose 2.2%, while healthcare firms lost 2.1% and automobiles declined 1.4%.

** Tech giants trading in Hong Kong ended almost flat after opening up 2.4%, with food-delivery firm Meituan down 2.5%. E-commerce behemoth Alibaba climbed nearly 3% to provide the biggest boost to the Hang Seng benchmark.

** Mainland developers listed in Hong Kong surged 3.4%, with Country Garden jumping more than 10% to become the biggest percentage gainer in the Hang Seng Index. (Reporting by Shanghai Newsroom; Editing by Edmund Klamann)

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