China’s slowdown in economic recovery is driving stock prices down; banks have grown

SHANGHAI, May 18 (Reuters) – China’s blue chips closed in the red on Thursday as investors began buying bank shares and AI-related stocks after data showed the country’s economic recovery was fading.

The Shanghai Composite was up 0.4% to 3,297.32, while the blue CSI300 chip was down 0.1% to 3,956.07.

The Hong Kong Hang Seng index rose 0.85% to 19,727.25 points, while the China Enterprises index rose 1.19% to 6,715.56 points.

The financial sector sub-index increased by 0.4%, the consumer goods sector lost 0.96%, the real estate index fell by 1.08% and the health sector fell by 0.85%.

The rise was accompanied by shares of Unionman Technology Co, ArcSoft Corp and Guangdong Fuxin Technology Co.

“Local investors are likely investing in state-owned companies to hedge as no one is yet sure of an economic recovery,” analysts at Gavekal Research say.

“The rally in the share price of low-value, high-yield stocks is in line with the current uncertain macroeconomic environment in China,” they added.

China’s industrial activity unexpectedly fell in April as domestic demand deteriorated, a private sector survey showed, suggesting that the manufacturing sector is losing momentum amid a volatile post-pandemic economic recovery.

Chinese bank stocks were up 1.2%, while AI-related stocks, including information technology and media, were up 1.4% and 3.1%, respectively.

The original news in English is available with the code (Reuters Shanghai)