Hang Seng Index Drops as Mainland Stocks Struggle for Direction
The Hang Seng Index fell 0.31% to 24,824 in morning trading, pulling back from an early high of 24,955. Mainland China’s CSI 300 edged 0.04% lower, while the Shanghai Composite Index edged 0.06% higher.
Overnight (August 5), US equity markets posted losses as investors reacted to July’s ISM Services PMI, which signaled a sharper loss of momentum across the sector. The Nasdaq Composite Index slid 0.65%, while the Dow and the S&P 500 closed the session down 0.14% and 0.49%, respectively.
The ISM Services PMI fell to 50.1 in July, down from 50.8 in June. Economists had expected an increase to 51.5. Notably, labor market conditions deteriorated, with the Employment Index dropping from 47.2 to 46.4. The weaker labor market data aligned with last week’s US Jobs Report that triggered recession fears while lifting bets on a September Fed rate cut.
EV and Tech Stocks Stumble Amid Demand Concerns
Rising US recession risks raised concerns about demand, impacting electric vehicle (EV) stocks. Li Auto (2015) tumbled 3.36%, while BYD (1211) slid 1.52%. This week, BYD reported a 10% drop in monthly sales in July, highlighting the weakening demand backdrop.
Tech giants Alibaba (9988) and Baidu (9888) declined 1.40% and 0.52%, respectively, dragging the Hang Seng Tech Index down 0.62%.
PBoC and Beijing Policy Moves Under the Spotlight
However, hopes for further People’s Bank of China (PBoC) interest rate cuts cushioned the downside. The PBoC will reportedly pursue a moderately loose monetary policy over the remainder of 2025, raising expectations of further interest rate cuts.
