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Hong Kong - China's CSI300 index slid to its lowest in nearly nine months early Monday, weighing on Hong Kong markets, after data showed exports unexpectedly tumbled in February, reigniting some fears of a slowdown in the world's second-largest economy.
Data over the weekend also showed inflation remained benign, but some investors were more concerned that producer prices fell for the 24th consecutive month, as the lack of pricing power suggested China is still struggling with excess capacity.
At midday, the CSI300 of the largest Shanghai and Shenzhen A-share listings was down 1.9 percent at its lowest since June 25. The Shanghai Composite Index sank 1.7%.
The Hang Seng Index shed 1.6% to 22 295 points, its lowest since February 26. The China Enterprises Index of the leading offshore Chinese listings in Hong Kong also sank 1.6% to its lowest in a month.
"Markets are over-reacting a little today, nobody's caring too much about the data skew from the different timing of the Chinese New Year this year from last year," said Alex Wong, director of asset management at Ample Finance.
"That said, my longer-term prognosis on China remains pessimistic. Unless you see a turnaround in producer prices, which would suggest they are getting excess capacity under control, it's not possible to play the China macro game," Wong added.
Cyclical counters Anhui Conch Cement fell 4.7% in Hong Kong and 3.8% in Shanghai. Jiangxi Copper tumbled 4.5% to an eight-month low in Hong Kong and 4.8% in Shanghai.
China's consumer prices rose 2% in February from a year earlier, their slowest rate in 13 months as pork prices fell by their most in over a year, a sign that slowing growth rather than rising prices poses a bigger risk.
Exports in February fell 18.1% from a year earlier, following a 10.6% rise in January, the General Administration of Customs said on Saturday. Imports rose 10.1%, yielding a trade deficit of $23bn for the month versus a surplus of $32bn in January.
Markets failed to take any cheer from an official China Securities Journal commentary on Monday, which highlighted the difficulty of hitting this year's 7.5% growth target, while suggesting policies aimed at balancing overall reform with stable growth are likely due in the second quarter.
In Hong Kong, China Construction Bank sank 1.9%, as did China Cinda Asset Management, which was created to manage bad debts.
Nomura banking analyst Lucy Feng on Monday recommended a long Cinda and short CCB trade. She downgraded CCB to neutral on rising concerns of property-related loans.
A plunging yuan further weighed on airlines, port operators, shippers and exporters. China's yuan opened trade at 6.1554 per dollar on Monday, down 0.5% from Friday's close of 6.1260. If losses hold, this would be the currency's biggest one-day loss since December 2008.
China Southern Airlines underperformed the airlines sector in Hong Kong, sinking 3.5%. Further hurting the stock was news that two passengers aboard the missing Malaysia Airlines flight had bought tickets using stolen passports through the Chinese carrier on a code-share basis.
"That incident will inevitably weigh on sentiment on its stock," said Ample Finance's Wong.
Tencent Holdings shares ended a volatile morning down 2% after buying a 15% stake in e-commerce firm JD.com for $214.7m, as the two seek to challenge Alibaba Group Holding's dominant position in online shopping in China.
