Global Market: China, Hong Kong stocks slip as weak economic data and property overhaul weigh

China and Hong Kong stocks declined on Monday as fresh economic data pointed to persistent weakness and imbalances in the world’s second-largest economy, while new measures aimed at reforming the housing presales system triggered a selloff in property shares.

The blue-chip CSI300 index fell 0.8% by midday, while the Shanghai Composite Index slipped 0.2%. In Hong Kong, the Hang Seng Index was down 0.7%.

China factory activity remains weak

Official data released on Monday showed China’s manufacturing activity improved in August, supported by stronger demand, but remained in contraction for a second consecutive month. At the same time, services and construction activity stayed subdued, highlighting uneven momentum across the economy.

The data reinforced concerns that China’s recovery remains fragile and could require additional policy support to sustain growth. Reuters reported that economists expect Beijing to consider further measures later in the year as risks to meeting its annual growth target become more pronounced.

Read more: Global Market: Japan's Nikkei falls nearly 2% as rate hike expectations weigh on sentiment


Property shares slide on presale overhaul
Market sentiment was also pressured by a sharp decline in property stocks after China introduced measures on Friday aimed at reducing developers’ reliance on funds raised through housing presales.

The proposed overhaul threatens to disrupt a financing model that has long been central to China’s property market. Presales still represented about 75% of new-home sales at the end of 2025, meaning changes to the system could have significant consequences for developers and housing construction.

An index tracking mainland-listed real estate companies fell 1.4%, while Hong Kong’s Hang Seng Mainland Properties Index dropped nearly 6%.

The changes could intensify pressure on private developers, which have already faced severe liquidity constraints following the property sector’s prolonged downturn. Banks may also become more inclined to favour state-owned developers, potentially widening the financing gap between state-backed and private companies.

Gold stocks weaken after hawkish Fed signals
China’s gold-related stocks also came under pressure after hawkish comments from Federal Reserve Chair Kevin Warsh on Friday triggered a selloff in bullion.

The decline in gold prices weighed on companies linked to the precious metal, adding another source of pressure to the broader Chinese market.

Banks offer some support
Chinese banking stocks provided a counterweight to the weakness elsewhere in the market. The country’s largest banks reported their strongest first-half profit performance since the height of the property crisis, helping lift investor sentiment toward the sector.

The stronger bank earnings offered some reassurance about the resilience of major financial institutions despite continued stress in the property market and uneven economic growth.

Overall, Monday’s market moves reflected growing concerns over China’s uneven recovery, with weak services and construction activity, continued property-sector stress and uncertainty over the outlook for policy support weighing on sentiment. Reuters reported that investors remain focused on whether Beijing will introduce further measures to support growth as the year progresses.

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