The Hang Seng index was unable to draw any significant support from gains on Wall Street or higher oil prices with the mainland GDP data also failing to trigger any notable buying interest on the day.
A slightly weaker than expected reading for the US underlying CPI inflation data curbed immediate fears surrounding higher inflation rates and helped underpin US equities with the S&P 500 index rising 0.62% on the day. Oil prices also increased following the latest API inventories data, which should have helped underpin Hong Kong stocks.
The mainland GDP data was in line with expectations at 6.7% for the third quarter, unchanged from the previous three months. The investment and retail sales data also matched expectations, while the industrial production data was slightly weaker than expected.
The overall market impact was measured and, although there were underlying concerns surrounding the yuan, a slightly softer dollar helped ease immediate concerns in Asian trading on Wednesday.
There were some concerns over the underlying decline in capital flows from the mainland through the existing Shanghai link, although with some hopes that there would be a recovery in flows, especially once the Shenzhen Connect link comes into operation in late November.
After a firm tone at the open, the Hang Seng index was unable to make any headway and held slight losses into the session break. Prices also drifted lower into the close with a slightly more fragile tone surrounding risk appetite as European markets opened lower.
At the close, there was a loss of 89.42 points and 0.38% at 23,304.97, while the China Enterprises index fell 0.81% on the day. All Hang Seng sectors were in negative territory with the Finance and Property Sectors declining by over 0.50%. The inability to gain support from generally positive fundamentals will cause some underlying concerns surrounding market trends.
Trends in the dollar and global bond yields will continue to be important for underlying confidence with developments in oil markets also watched closely.
Hang Seng 4H Chart