China Stocks Tumble Amid Financial Sector Woes; Tech Shares in Hong Kong Surge

On Thursday, Chinese stocks declined primarily due to weak earnings from financial sectors and corrections in state bank stocks, while Hong Kong shares rose led by technology companies. The CSI Financials index saw a notable drop, and UBS further downgraded China's economic growth forecast, impacting market sentiment.

On Thursday, Chinese stocks saw a significant drop, dragged down by weak earnings from the financial sector and corrections in stock prices of major state banks. However, Hong Kong shares experienced a rise, driven by stronger tech share performances.

The CSI Financials index dropped 1.8%, with Xiamen Bank falling 6.9% post a 15% decline in its half-year net profit. Shares of Citic Bank and Bank of Communications both fell nearly 7% in Hong Kong. Notably, shares of major Chinese state banks that had soared over 20% this year, like Agriculture Bank of China, saw a 4.7% decline.

Additionally, UBS reduced China's 2024 economic growth forecast to 4.6% from 4.9%, attributing it to weaker property activity. Electric vehicle maker Li Auto's shares dropped 9.8%, but Meituan bounced back by 12.6% after its second-quarter earnings release. At the close, the Shanghai Composite index was down 0.5% at 2,823.11, while the blue-chip CSI 300 index decreased 0.27%.

Contrastingly, consumer staples and healthcare sectors saw gains. The smaller Shenzhen index ended up 1.13%, and the start-up board ChiNext Composite index rose by 0.65%. Hong Kong's Hang Seng index ended 0.53% higher at 17,786.32, supported by a 0.5% rise in tech giants despite a regional tech slump.

Across the region, MSCI's Asia ex-Japan stock index weakened 0.16%, while Japan's Nikkei index closed down by 0.02%. The yuan strengthened to 7.1078 per U.S. dollar, 0.3% firmer than the previous close.

(With inputs from agencies.)