Mainland China and Hong Kong Stocks Slide Amid Economic Woes and Geopolitical Tensions

Mainland China and Hong Kong stocks ended lower on Monday, continuing a losing trend as investors anticipate policy stimulus in light of a weak economic recovery, rising geopolitical tensions, and foreign outflows. Major indexes like the Shanghai Composite and Hang Seng experienced significant drops, driven by poor performance in the property sector.

Mainland China and Hong Kong stocks closed lower on Monday, marking a continuation of the ongoing decline, as investors braced for more policy stimulus amid a sluggish economic recovery, escalating geopolitical tensions, and increasing foreign outflows.

At the close, the Shanghai Composite index dropped 0.93% to 2,922.45 points, registering its lowest close since February 19. The blue-chip CSI300 index fell 0.85% to 3,401.76 points, sustaining losses for the fifth consecutive session, primarily led by a 2.74% drop in the property sector.

The smaller Shenzhen index saw a decline of 1.88%, while the start-up board ChiNext Composite index weakened by 1.621%. Investors are now looking forward to the Third Plenum this month, which is expected to focus on further reforms and modernization policies.

China's services activity expanded at its slowest pace in eight months, and business confidence hit a four-year low in June, according to a recent private-sector survey. On Friday, China also announced new steps in its anti-dumping investigation into European brandy, heightening tensions, especially as the European Commission's provisional tariffs on Chinese-made electric vehicles took effect.

Despite these challenges, China's securities regulator reaffirmed its commitment to cracking down on financial fraud and seeking harsher penalties for violations to restore confidence in its stock markets. Separately, China's central bank announced plans on Monday to conduct temporary bond repurchase agreements or reverse repos to enhance open market operations and maintain ample banking system liquidity.

In Hong Kong, the Hang Seng index closed down 275.55 points, or 1.55%, at 17,524.06 points, while the Hang Seng China Enterprises index dropped 1.53% to 6,284.73 points.

(With inputs from agencies.)