China, Hong Kong stocks fall on weak economic data, new property rules

Business Recorder reported that stocks in mainland China and Hong Kong moved lower on Monday, pressured by fresh economic activity figures and new rules aimed at reshaping Beijing's housing presales system. At the midday break, the blue-chip CSI300 index was 0.8% weaker, the Shanghai Composite had lost 0.2%, and the Hang Seng had fallen 0.7%.

Official figures released Monday showed factory activity in China picked up in August, thanks to firmer demand, yet it still shrank for the second month in a row. Services and building activity stayed soft, which points to deeper imbalances across the economy. UBS Securities' chief China economist, Yu Song, expects further support later this year, citing growing risks to the annual growth target.

Property shares sold off after Beijing unveiled measures on Friday to reduce developers' reliance on presale funds. Gavekal Dragonomics analyst Zhang Xiaoxi warned that the shift would reduce housing starts and could push more private developers out of the market as banks favour state-owned firms. Shares tied to gold also dropped steeply after Federal Reserve Chairman Kevin Warsh's hawkish comments on Friday hit bullion, though Chinese banks gained after the largest lenders posted their strongest first-half profit since the peak of the property turmoil.