China stocks end a tad lower, hit by Covid concerns and dim economic outlook

Tencent plans to sell Meituan shares to placate domestic regulators and monetise an eight-year-old investment, four sources said.

Tencent plans to sell Meituan shares to placate domestic regulators and monetise an eight-year-old investment, four sources said.

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SHANGHAI (Aug 16): China's blue-chip index edged lower on Tuesday (Aug 16), on worries about Covid-19 flare-ups and slowing economic growth, although property stocks jumped on news of policy support.

Meituan plunged 9%, after sources told Reuters that Tencent Holdings Ltd plans to sell all or the bulk of its US$24 billion (RM107.18 billion) stake in the food delivery giant. The news dragged down Hong Kong's main stock benchmark.

The blue-chip CSI 300 Index fell 0.2%, while the Shanghai Composite Index gained 0.1%.

The Hang Seng Index fell 1.1%, while the China Enterprises Index lost 1.3%.

China's central bank cut key lending rates in a surprise move on Monday, as data showed Chinese economic activity and credit expansion slowed sharply in July. 

Analysts now expect banks to cut the loan prime rate next week.

Other Asian equity markets struggled for direction, hampered by worries over global growth, following weak China data.

Most industry sectors slipped, with healthcare and non-ferrous metal down more than 1%.

Real estate developers listed in the mainland rose 1.6%, while mainland developers traded in Hong Kong jumped nearly 6%.

Chinese regulators have instructed state-owned China Bond Insurance Co Ltd to provide guarantees for onshore bond issuance by a few private property developers, including Longfor Group and CIFI Holdings, according to sources.

Longfor, CIFI and top developer Country Garden soared between 9% and 13% in Hong Kong.

China's Covid-19 situation has been worsening over the past week, with the daily local caseload surging to more than 2,000, according to Nomura in a note.

As of Monday, 22 cities in China were implementing full or partial lockdowns, or some kind of district-based control measures, affecting 5.6% of the population and 8.8% of gross domestic product, according to a Nomura survey.

Meituan slumped more than 9% in Hong Kong, its biggest daily drop in five months.

Tencent plans to sell Meituan shares to placate domestic regulators and monetise an eight-year-old investment, four sources said. 

Tencent edged up 0.9%, while the Hang Seng Tech Index declined 2%.