Hong Kong stocks slid to halt a monthly gain as an official report showed that manufacturing in China contracted for a fourth consecutive month and a slew of companies reported disappointing results.
The Hang Seng Index fell 1.6 per cent to 17,703.54 as of 10.50am local time. The Hang Seng Tech Index dropped 1.8 per cent, and the Shanghai Composite Index retreated 0.6 per cent.
New World Development tumbled 12.4 per cent to HK$6.88 after forecasting a loss of as much as HK$20 billion (US$2.56 billion) for the financial year ending in June. Industrial and Commercial Bank of China sank 2.9 per cent to HK$4.36 and China Construction Bank dropped 1.8 per cent to HK$5.42 after both of the state-backed lenders posted a 1.8 per cent profit decline in the first half.
The purchasing managers index, a survey of sentiment among Chinese factory owners, stayed at 49.1 in August, the National Bureau of Statistics said over the weekend, down from 49.4 in July and short of the consensus estimate of 49.5. Any reading below 50 indicates contraction.
The rebound in Hong Kong in August may present some challenges as traders digest the weak results, which may trigger earnings downgrades. The Hang Seng Index rose 3.7 per cent last month, the biggest monthly gain since April, on expectations the Federal Reserve will cut the interest rate for the first time in four years amid cooing inflation and a softening labour market.
Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.2 per cent and South Korea’s Kospi was plat, while Australia’s S&P/ASX 200 lost 0.2 per cent.