Chinese Stock Market Takes a Hit: Significant Losses in Consumer and Property Sectors

Chinese stock markets faced significant downturns on Monday, particularly in the consumer and property sectors. The Shanghai Composite and blue-chip CSI300 indices saw considerable losses, influenced by economic data and mortgage refinancing speculations. Hong Kong's Hang Seng Index also fell, driven by notable losses in companies like New World Development and China Vanke.

Chinese shares plummeted in heavy trade on Monday, with consumer and property companies experiencing the most significant losses. This downturn was driven by economic data and skepticism over a report suggesting potential easing of mortgage refinancing in China.

The Shanghai Composite index closed down 1.1% at 2,811.04 points. China's blue-chip CSI300 index finished 1.7% lower, while the real estate index fell 4.1%. The consumer staples sector dropped 3.1%, and the food and beverage index declined 3.5%.

In contrast, Chinese H-shares listed in Hong Kong closed 1.9% lower at 6,211.61, while the Hang Seng Index ended down 1.7% at 17,691.97. A private survey indicated that new home prices in China barely rose in August, and developers China Vanke and Hong Kong's New World Development reported losses.

Shares of New World Development took the largest hit on the Hang Seng, plunging 13% to a two-decade low after estimating a net loss of HK$20 billion ($2.6 billion) for the year ending June 30. China Vanke shares fell 5% following a 7.6 billion yuan ($1.1 billion) core loss in the first half of the year, highlighting the sector's deep troubles.

Analysts evaluated the potential impact of possible new mortgage refinancing rules, reported by Bloomberg News on Friday. Nomura economist Ting Lu opined that inter-bank refinancing is unlikely but anticipates mortgage rate cuts that could save borrowers around 100 billion yuan ($14 billion) annually.

The largest losses among H-shares were bottled water seller Nongfu Spring, down 5.5%; China Resources Land, down 5.4%; and China Overseas Land & Investment, down 4.7%. The Caixin/S&P Global manufacturing PMI showed growth in August, though a survey of larger companies on Saturday indicated a contraction for the fourth consecutive month.

Around the region, MSCI's Asia ex-Japan stock index dropped 0.33%, while Japan's Nikkei index closed up 0.14%. About 34.07 billion shares traded on the Shanghai exchange, approximately 123% of the market's 30-day moving average. Meanwhile, 3.08 billion Hang Seng index shares were traded, roughly 128% of the market's 30-day moving average. ($1 = 7.1009 Chinese yuan, $1 = 7.7964 Hong Kong dollars)

(With inputs from agencies.)