Hong Kong stocks fall after disappointing economic data, trade tensions

The Hong Kong stock market closed lower on Friday on lacklustre China economic data, and as Chinese and U.S. officials remained locked in high-level talks, aimed at resolving the two countries' trade dispute.

At the close of trade, the Hang Seng index was down 1.9 per cent at 27,900.84 points, while the Hang Seng China Enterprises index closed 2.1 per cent weaker. Both indexes lost 0.2 per cent on the week. The sub-index of the Hang Seng tracking energy shares ended 1.5 per cent lower, the IT sector closed 2.7 per cent weaker, the financial sector ended down 2.1 per cent and the property sector shed 1.5 per cent.

China's banks made the newest loans on record in January as policymakers try to jumpstart sluggish investment and prevent a sharper slowdown, according to official data. However, investors stayed focused on the Sino-U.S. trade dispute. The current round of high-level talks between the two countries is due to conclude later on Friday. The results of a meeting on Friday between U.S. Treasury Secretary Steve Mnuchin and China's President Xi Jinping could be important for foreign exchange investors.

China had pledged to make its industrial subsidy programs compliant with World Trade Organization rules and end those that distort markets but had offered no details on how it intends to achieve that goal, sources briefed on the talks told Reuters.

White House economic adviser Larry Kudlow said on Friday that Washington has not decided to extend the March 1 deadline, an idea floated by President Donald Trump this week. U.S. tariffs on $200 billion of imports from China could rise to 25 per cent from 10 per cent if China and the United States failed to reach a deal before the deadline. China's factory-gate inflation slowed for a seventh straight month in January to its weakest pace since September 2016, official data on Friday showed, raising fears that deflation may return as domestic demand cools.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 1.2 per cent, while Japan's Nikkei index closed down 1.1 per cent. The three biggest H-shares percentage decliners were ZhongAn Online P & C Insurance Co Ltd and Citic Securities Co Ltd, which closed 4.6 per cent lower, followed by GF Securities Co Ltd, which ended down 4.5 per cent.

About 1.84 billion Hang Seng index shares were traded. The volume traded in the previous trading session was 1.48 billion. At the close, China's A-shares were trading at a premium of 17.43 per cent over the Hong Kong-listed H-shares.

(With inputs from agencies.)