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Staff of Reuters 3 Minutes to Read (Reuters) – SHANGHAI, July 2 (Reuters) – On Friday, Chinese stocks are expected to decline the most in more than three months, owing to concerns about slower economic growth and tighter credit restrictions. ** Amid widespread Asian weakness, Hong Kong equities sank, led by technology stocks. ** According to State Street Global Markets, “more tightening fears out of China mixed with greater uncertainty regarding the impact of the delta variant may have driven confidence considerably lower amongst Asia investors.” ** At the end of the morning session, the CSI300 index was down 2.4 percent at 5,105.72 points, while the Shanghai Composite Index was down 1.6 percent at 3,532.23 points. Unless there is a significant afternoon comeback, both indices are certain to fall to their lowest levels since March 19. ** The Hang Seng index fell 1.6 percent to 28,365.36 points in Hong Kong, while the Hong Kong China Enterprises Index down 2.1 percent to 10,441.09. ** “Given the macro growth hiccup and earnings recovery uncertainty ahead of the forthcoming results season, the market is looking for clearer signals before turning more bullish,” Morgan Stanley wrote in a report. ** The firm decreased its second-quarter GDP prediction due to broad-based macro weakness in April-June, as well as further drops in both manufacturing and non-manufacturing PMIs in June. ** Aerospace and defense, as well as food and beverage, sank more than 3% in China. ** Hong Kong’s Hang Seng Tech Index, which covers some of China’s biggest technology companies, plummeted 3%. ** Property stocks in China and Hong Kong have been faltering, resulting in broad-based falls. “Amid tight credit conditions for developers and dismal investor confidence, onshore and offshore capital markets will remain turbulent,” Celine Yang, a Moody’s Vice President and Senior Analyst, said in a statement on Friday. ** Guo Xiaolin, a fund manager at asset management Boshi, cautioned investors to remain wary of short-term volatility. “If short-term mood fluctuations brought down share prices in the new energy vehicle sector, it may be a nice purchasing opportunity,” Guo noted. (Shanghai Newsroom contributed reporting; Amy Caren Daniel edited the piece.)/nRead More

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