February 28, 2018 / 4:27 AM / a year ago

China, HK stocks extend drop on weak data, Fed concerns

* SSEC -1.3 pct, CSI300 -1.2 pct, HSI -1.7 pct

* HK->Shanghai Connect daily quota used - 2.3 pct, Shanghai->HK daily quota used -6.9 pct

* FTSE China A50 -1.9 pct, BNY Mellon ADR China Select Index -2.4 pct

SHANGHAI, Feb 28 (Reuters) - China and Hong Kong stocks extended their decline on Wednesday morning, as weak factory data from China rekindled worries about the country’s economic health amid fears of faster rate rises in the United States. ** Growth in China’s manufacturing sector in February slowed more than expected to the weakest in over 1-1/2 years as the Lunar New Year holidays disrupted business activity and tougher pollution rules curtailed factory output. ** “The lower PMI readings for February may be partly due to Chinese New Year,” Julian Evans-Pritchard, China Economist at Capital Economics, said in a note, adding “but even if we account for such volatility by averaging across the first two months of the year, the data still point to a clear slowdown in early 2018”. ** Growth in China’s services industry also slowed, suggesting the key sector was starting to display signs of fatigue. ** Sentiment was already sour after Fed’s Jerome Powell gave an upbeat view of the U.S. economy on Tuesday and said recent data had strengthened his confidence on inflation. ** Further dampening sentiment in Hong Kong, data showed the southbound leg of Shanghai-Hong Kong Stock Connect saw record net outflows of 2.9 billion yuan on Tuesday. ** At 04:02 GMT, the Shanghai Composite index was down 41.92 points or 1.27 percent at 3,250.15. ** China’s blue-chip CSI300 index was down 1.2 percent and its financial sector sub-index fell 1.8 percent, while the consumer staples sector shed 3.1 percent and the real estate index slid 1.28 percent. ** Chinese H-shares listed in Hong Kong fell 2.56 percent at 12,322.19 while the Hang Seng Index was down 1.68 percent at 30,743.08. ** The smaller Shenzhen index was unchanged for the day and the start-up board ChiNext Composite index was higher by 0.97 percent. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.17 percent while Japan’s Nikkei index was down 0.95 percent . ** The yuan was quoted at 6.3293 per U.S. dollar, 0.19 percent weaker than the previous close of 6.317. ** The largest percentage gainers in the main Shanghai Composite index were Daheng New Epoch Technology Inc, up 9.97 percent, followed by Datang Telecom Technology Co Ltd , up 9.95 percent, and Qingdao Tianhua Institute of Chemistry Engineering Co Ltd, up 7.33 percent. ** The largest percentage losses in the Shanghai index were Aluminum Corp of China Ltd, down 9.92 percent, followed by Shede Spirits Co Ltd, down 5.31 percent, and Sichuan Swellfun Co Ltd, down 5.1 percent. ** So far this year, the Shanghai stock index is down -0.46 percent while China’s H-share index is up 8.0 percent. Shanghai stocks have declined 5.42 percent this month. ** The top gainers among H-shares were China Railway Group Ltd up 0.7 percent, followed by CGN Power Co Ltd gaining 0.95 percent and Great Wall Motor Co Ltd up by -1.07 percent. ** The three biggest percentage losers in H-shares were China Petroleum & Chemical Corp which fell 4.46 percent, China Vanke Co Ltd, down 4.3 percent, and China Construction Bank Corp, down 3.7 percent. ** About 8.52 billion shares have traded so far on the Shanghai exchange, roughly 40.7 percent of the market’s 30-day moving average of 20.91 billion shares a day. The volume traded was 17.42 billion as of the last full trading day. ** As of 04:03 GMT, China’s A-shares were trading at a premium of 27.67 percent over the Hong Kong-listed H-shares. ** The Shanghai stock index is below its 50-day and 200-day moving averages. ** The price-to-earnings ratio of the Shanghai index was 15.05 as of the last full trading day while the dividend yield was 1.9 percent. ** So far this week, the market capitalisation of the Shanghai stock index has risen by 1.17 percent to 29.50 trillion yuan. ** In Hong Kong, the sub-index of the Hang Seng index tracking energy shares dipped 2.9 percent while the IT sector fell 2.5 percent. The top gainer on Hang Seng was WH Group Ltd, up 1.16 percent, while the biggest loser was China Petroleum & Chemical Corp, down 4.46 percent.

Reporting by Luoyan Liu, Samuel Shen and John Ruwitch; Editing by Vyas Mohan

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