Mainland shares in China fell for a fifth consecutive session on Friday amid concerns about a directive that requires large banks to dedicate 1/3 of new lending to private enterprise and fresh signs that the country’s auto market is headed for its first annual decline in twenty years.
The directive to banks was seen as a sign of panic among investors as Beijing struggles to cope with a string of defaults and support private enterprise at a particularly delicate juncture. As far as auto sales are concerned, Thursday’s news that car sales fell a fifth month is just plain old bad.
But the losses in Hong Kong were even more acute. Today’s rout comes on the one-week anniversary of the best day for the Hang Seng since 2011. Last Friday, news that Donald Trump had instructed his cabinet to draft a trade truce to present to Xi Jinping at the G-20 sent Asian shares surging, with Hong Kong equities leading the charge.
Fast forward a week and it’s an entirely different story. The Hang Seng plunged 2.4%, its ninth worst day of the year.
H-shares were similarly beset, diving more than 2.5% as the mainland malaise dented sentiment.
This doesn’t look particularly good:
Shares of AAC Tech posted their worst weekly decline since May of 2010 after reporting net income for Q3 that missed even the lowest analyst estimates. The lackluster report was followed by a raft of downgrades.
Meanwhile, Ctrip.com is on pace for a disastrous week following Thursday’s truly dramatic post-earnings plunge (guidance was the problem).
For its part, Tencent slid nearly 5% on Friday, as the stock continues to swing around wildly. For the week, the shares fell 8%, logging their sixth weekly loss in seven.
Long story short, things aren’t looking great right now as last week’s trade-related optimism gives way to the reality that China’s economy is decelerating and tech heavyweights are not immune.