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Mainland China and Hong Kong equity markets closed lower after property stocks led broad-based declines, reflecting continued concerns over the country's real estate sector and slowing economic growth. Investors remained cautious ahead of key domestic economic indicators expected over the coming days and awaited the release of minutes from the U.S. Federal Reserve's latest policy meeting for signals on future interest rates. Fresh projections from the World Bank indicating slower economic growth over the next two years also added to market pressure, while authorities continued efforts to strengthen Hong Kong's role as an offshore yuan trading hub.
Mainland China and Hong Kong stock markets traded lower in the past week, with property companies emerging as the biggest drag on investor sentiment as markets turned cautious ahead of key domestic economic data and signals from the U.S. Federal Reserve.
By the midday trading session, the benchmark Shanghai Composite Index had declined 1%, while the blue-chip CSI300 Index was down 0.8%. In Hong Kong, the Hang Seng Index slipped 0.4%, while the Hang Seng Tech Index edged 0.3% lower.
Real estate stocks recorded the sharpest losses during morning trade. The sector's sub-index dropped 3.1%, extending pressure on Chinese property developers as the market continues to grapple with weak housing demand and a prolonged adjustment in the sector.
The weakness in property shares followed the World Bank's latest economic outlook, which projected China's economy to expand by 4.4% in 2026 before slowing further to 4.3% in 2027. The multilateral lender attributed the softer growth outlook to the ongoing correction in the property market and continued cautious consumer spending.
Market participants are also awaiting a series of domestic economic indicators expected over the coming days, which are likely to offer a clearer assessment of China's economic momentum. Inflation data for June is scheduled to be released later this week, followed by second-quarter gross domestic product (GDP) figures and other key activity indicators next week.
Serena Zhou, Senior China Strategist at Mizuho Securities, said high-frequency economic indicators likely remained soft during June. However, she expects second-quarter GDP growth to be relatively resilient, supported by the economy's supply-side structure, steady services consumption and continued investment in technology-related capital expenditure during the quarter.
She further indicated that Beijing is likely to continue with measured and targeted policy support, with fiscal measures expected to remain the primary tool for supporting economic growth rather than broad-based stimulus.
Global investors are also closely monitoring the release of minutes from the U.S. Federal Open Market Committee's latest meeting, expected later this week, for further clarity on the direction of U.S. interest rates and their potential impact on global financial markets.
In a separate development, authorities in Beijing and Hong Kong unveiled a series of initiatives to strengthen currency, bond and gold trading in Hong Kong. The measures are aimed at reinforcing the city's position as a leading offshore yuan trading centre amid evolving geopolitical conditions and efforts to deepen cross-border financial market integration.
Despite the recent weakness in equity markets, investor sentiment towards Chinese assets has gradually evolved in recent months. Market participants have increasingly viewed Chinese equities as relatively resilient during periods of global volatility, supported by stable domestic returns despite geopolitical uncertainties and rapid developments in artificial intelligence-driven markets.
Source Reuters
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