China: troubling news hits Hang Seng

For the bulls, Wednesday is so far a matter of ?look away now?. Worst hit among Asian markets ? all of which are comfortably in negative territory ? is the Hang Seng, down more than 3 per cent by mid-afternoon.

While the main concern for investors globally might be Greece, the slow drum beat of bad news from China continues.

Compared to the miserable economic data last week, the news on Wednesday is little more than speculation. But it is still a further cause for concern for those worried about the pace of China?s slowdown.

First came the FX purchase data, which suggests that capital has been flowing out of China, as Bloomberg reported.

China?s central bank and commercial lenders sold more foreign currency than they bought for the first month this year in April, indicating capital may have flowed out of the world?s second-biggest economy.

Chinese banks sold a net 60.6 billion yuan ($9.59 billion) of foreign currency in April, according to calculations based on preliminary data released by the People?s Bank of China yesterday. That compares with 124.6 billion yuan of net purchases in March.

Even more troubling was a report in the Shanghai Securities Journal, cited by Reuters, that said lending at China?s biggest four banks has been flat so far this month.

The report was based on an unnamed ?authoritative source?, and two weeks worth of data doesn?t tell you very much. Also, China?s has since lowered the RRR again, adding some additional liquidity into the system.

However, it all adds to the negative noise surrounding China?s economy. Down we go.

Related reading:
Shares extend losses on Greece fears, FT
China?s big 4 banks lending flat in early May, Reuters

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