Hang Seng falls 2.88% in intraday trading amid funding pressures, weak Chinese demand
Key Facts
The Hang Seng Index fell 2.88% during the October 22 session, extending losses in Hong Kong stocks, according to EL7 data accompanying the report. The index stood at 22,970.48 points during trading, amid pressure on Asian equities that the Associated Press linked to concerns over borrowing costs and financing the expansion of artificial intelligence. In its coverage dated the same day, the agency reported an intraday index reading of 23,003.17 points, down 2.7%. The Associated Press said AI stocks came under pressure amid concerns that rising financing costs could slow data centre construction. The agency described those concerns by saying that "data centre construction could slow as the cost of borrowing money rises".
The stock decline followed China's statistics bureau's October 19 announcement that real gross domestic product grew 4.5% in the third quarter from the same quarter a year earlier. Economic growth thus accelerated from 4.3% year-on-year in the second quarter, according to the official statement, which also showed continued expansion in industrial activity. Value-added output at industrial enterprises above a designated size rose 5.5% in September from the same month a year earlier. On the consumption side, retail sales of consumer goods grew 1.1% year-on-year in September, according to the statistics bureau. Retail sales had risen 0.4% year-on-year in August, according to the bureau's statement published on the Chinese government's website, making September's reading an acceleration in spending growth on consumer goods.
On monetary policy, China kept its one-year loan prime rate at 3.00% in its October 20 announcement, according to Reuters. It also held the five-year loan prime rate at 3.50%, leaving both key lending tenors unchanged in the October announcement. The agency said the decision extended the run of unchanged loan prime rates to 17 consecutive months, continuing the stance adopted in previous months. Reuters linked the hold to the strong growth figures preceding the announcement, in its assessment of policymakers' approach to providing additional monetary support. The agency described their stance as reflecting "no urgency to introduce fresh monetary easing", after economic growth accelerated in the third quarter.
In the backdrop to Hong Kong trading, CATL shares had fallen 8.0% during trading on Wednesday, October 21, after the company reported quarterly results below expectations, according to Investing.com. The share price reached HK$378.8 during that session as the company's stock declined. The website said that price marked a 15-month low for the stock, in reaction to the reported quarterly results. The company's third-quarter net profit rose 14.5% from the same period a year earlier to 21.25 billion yuan, according to Investing.com's coverage of its results. But profit growth slowed compared with the second quarter, when it posted a 36.5% year-on-year increase, leaving the shares lower despite continued profit growth.
The backdrop to China's economic picture includes a 7.2% contraction in fixed-asset investment, excluding rural households, from January to September compared with the same period a year earlier, according to the statistics bureau. In the property sector, development investment fell 20.6% year-on-year in the first nine months, declining more sharply than fixed-asset investment overall. The bureau warned in its October statement that "the problem of weak domestic demand remains pronounced", despite the improvement in economic growth. It added in the same statement that "the foundation for stable economic growth still needs to be consolidated", in its assessment of the challenges facing the economy. The Chinese statistics bureau's official calendar set November 16, 2026 as the date for the next release on national economic performance.