China, HK stocks slip as economic woes offset Biden-Xi summit optimism

** The message came ahead of a scheduled meeting this week between U.S. President Joe Biden and his Chinese counterpart Xi Jinping in San Francisco. ** Gavekal Dragonomics said geopolitical risks have retreated as China and the U.S. resume working- and leadership-level contacts, "but the shift in policy direction, while welcome, still awaits confirmation that the economy is actually getting onto a firmer footing." ** Investors are closely monitoring a slew of economic data to be released this week, including industrial output, urban investment and retail sales for October.

China and Hong Kong stocks slipped on Monday as initial euphoria over a summit between the top leaders from the world's two largest economies later this week was offset by lingering concerns over China's economic health. ** China's blue-chip CSI300 Index was down 0.5% by the lunch break and the Shanghai Composite Index dipped 0.2%. Hong Kong's benchmark Hang Seng Index was down 0.1%.

** U.S. Treasury Secretary Janet Yellen said on Friday that she agreed with Chinese Vice Premier He Lifeng to "intensify communication" on economic issues. ** The message came ahead of a scheduled meeting this week between U.S. President Joe Biden and his Chinese counterpart Xi Jinping in San Francisco.

** Gavekal Dragonomics said geopolitical risks have retreated as China and the U.S. resume working- and leadership-level contacts, "but the shift in policy direction, while welcome, still awaits confirmation that the economy is actually getting onto a firmer footing." ** Investors are closely monitoring a slew of economic data to be released this week, including industrial output, urban investment and retail sales for October. Early indicators are that growth momentum weakened again in October following a tentative rebound in previous months.

** "The debate on investing in China has shifted profoundly towards long-term structural challenges particularly on debt and deflation fronts, and should continue well into 2024," Morgan Stanley strategists wrote. ** "As a result, the hurdles ahead to a sustainable China equity market recovery are still high, with mounting macro pressure on earnings coupled with currency weakness."

** Chinese developers listed in Hong Kong and China continued to sag, with ratings agency Moody's warning that "China's prolonged property market downturn will have adverse spillover effects amid slowing economy." ** China bank shares also fell, with index heavyweight Industrial and Commercial Bank of China (ICBC) dropping more than 1% in Shanghai following a ransomware attack on ICBC's U.S unit.

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