HSI Edges Up As Chinese Data Fuels Stimulus Hopes

Hong Kong stocks headed into the break on Monday on a positive note as data showing another slowdown in Chinese economic growth fuelled speculation the government would introduce fresh stimulus measures.

The Hang Seng Index rose 0.2 percent, to 28,532 by the break.

On the mainland, the Shanghai Composite Index reversed course and gained 0.3 percent, to to 2,942 while the Shenzhen Composite Index jumped 0.9 percent, to 1,570.

But some Asian markets were dampened by the Chinese data. Sydney shed 0.5 percent, Singapore was off 0.2 percent, Seoul dropped 0.1 percent and Wellington fell 0.4 percent.

Taipei edged up 0.1 percent, Manila surged 1 percent and Jakarta jumped 0.7 percent. Tokyo was closed for a holiday.

"While GDP touched a 27-year low in Q2, the on-consensus print does lessen market fears that China's economy is headed for a hard landing," said Stephen Innes at Vanguard Markets.

Observers also pointed out that the weakness raised the chances of further monetary easing measures from the central People's Bank of China (PBOC), while investors were also tracking the progress of trade talks between Washington and Beijing.

"While the PBOC has already delivered stimulus this year, markets are awaiting a bazooka of [bank reserve ratio] cuts and additional measures, which will probably come if trade talks collapse," said Oanda senior market analyst Edward Moya.

"If talks steadily progress, we will still probably see the PBOC deliver fresh stimulus following the Fed's highly anticipated rate cut at the end of the month."

The US dollar was slightly lower against most high-yielding, riskier currencies on bets the Fed will cut borrowing costs at the end of the month, though there is speculation about how far it will go.

While Fed boss Jerome Powell's congressional testimony last week flagged a reduction, data indicating inflation remains reasonably healthy has kept investors guessing.

Bitcoin plunged almost US$2,000 to US$10,000 after Donald Trump last week expressed his mistrust of cryptocurrencies, saying it was "not money" and warning that those wishing to join the trade would have to abide by banking regulations. (AFP)