SHANGHAI, Sept 15 (Reuters) – Chinese stocks paused on Friday and looked set to end the week little changed, after a slew of data suggested the economy is slowly starting to lose some momentum in the face of rising borrowing costs and government-mandated capacity cuts.
The disappointing data on Thursday took some of the shine off China’s surprisingly robust growth in the first half of the year, which has helped fuel stronger global demand.
China’s blue-chip CSI300 index rose 0.2 percent to 3,838.37 points by the lunch break, while the Shanghai Composite Index lost 0.3 percent to 3,360.63.
For the week, the CSI300 looked set to edge up 0.3 percent, taking its year-to-date gain to 16 percent, while the SSEC dipped 0.1 percent.
In Hong Kong, stocks reversed earlier weakness to end the morning higher, shrugging another missile test by North Korea.
Cyclical stocks, which have rallied strongly this year on the back of China’s economic recovery, were under selling pressure.
Fixed-asset investment, a key growth driver for China, grew 7.8 percent in January-August from a year earlier, the weakest pace in nearly 18 years, while factory output and retail sales also grew less than anticipated.
Analysts in particular singled out a slowdown in infrastructure investment as well as the impact of government moves to close mines and heavily-polluting factories to reduce air pollution. But they added that while momentum may fade slightly, China’s growth is expected to remain relatively robust through the rest of the year.
An index tracking resource shares dropped over 1 percent, as investors dumped steelmakers and coalminers.
However, some analysts think the sell-off is overdone.
“This is irrational,” wrote Ma Wenyu, strategist of Shanxi Securities.
Major resources companies will continue to benefit from China’s tougher rules on pollution, he said, suggesting investors should seek bargains in undervalued stocks in sectors such as steel, aluminium, rare earth and paper-making.
Weakness in resources shares on Friday was offset by strength in property players, as growth in property investment accelerated to 7.8 percent in August from 4.8 percent in July.
An index tracking developers surged over 4 percent, as index heavyweight Vanke jumped 8.5 percent to a record high.
HONG KONG
In Hong Kong, the Hang Seng index added 0.3 percent to 27,861.42, while the Hong Kong China Enterprises Index lost 0.2 percent to 11,079.78.
For the week, the Hang Seng looked set to rise 0.6 percent, taking its gains for far this year to nearly 27 percent.
(Reporting by Samuel Shen and John Ruwitch)
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