China, Hong Kong Stocks Slip on Weak Data and Property Overhaul

Chinese and Hong Kong stock markets declined on Monday, pressured by fresh economic data showing persistent weakness in key sectors and by new regulations aimed at overhauling Beijing's housing presale system.

The blue-chip CSI300 Index fell 0.8% by midday, while the Shanghai Composite Index lost 0.2%. In Hong Kong, the Hang Seng Index dropped 0.7%.

Official data released Monday showed China's factory activity improved in August on stronger demand, but remained in contraction for a second consecutive month. Services and construction activity stayed weak, underscoring deepening imbalances in the economy.

UBS Securities Chief China Economist Yu Song said he expected additional support later in the year, citing "more obvious risks of not reaching the annual growth target."

Market sentiment was further dampened by a selloff in property shares after China on Friday introduced measures to reduce developers' reliance on presale funds. Presales still accounted for about 75% of new housing sales at the end of 2025, according to Gavekal Dragonomics analyst Zhang Xiaoxi, who said the overhaul would create disruptions and likely lead to a decline in housing starts. Zhang predicted more private-sector developers would exit the market as banks favour state-owned developers.

An index tracking China-listed real estate firms dropped 1.4%, while the Hang Seng Mainland Properties Index tumbled nearly 6%.

Gold-related stocks also fell sharply after U.S. Federal Reserve Chairman Kevin Warsh's hawkish remarks on Friday triggered a selloff in the yellow metal.

Chinese banks, however, climbed after the country's largest lenders reported their strongest first-half profit since the height of the property crisis.