(Bloomberg) -- Chinese stocks recorded their worst start to a year since 2019, as weak manufacturing and home sales data reinforced investor concerns about the economic outlook.

The CSI 300 Index ended 1.3% lower on Tuesday to halt a three-day gain while the Hang Seng China Enterprises Index declined 1.7%. It was the worst first trading day of the year since 2019 for both gauges. Markets in Hong Kong and the mainland were shut on Monday for the new year holiday. 

Sentiment took a hit after reports on Sunday showed China’s factory activity shrank in December to the lowest level in six months and a slide in home sales accelerated. The weak data may fuel expectations for more stimulus from authorities after leaders vowed to maintain a pro-growth stance in 2024.

“The performance of PMI continued to be weak and the wait-and-see sentiment toward the introduction of mid- to long-term deepening reform policies has intensified,” said Shen Meng, a director with Beijing-based Chanson & Co. “Therefore, there is still more uncertainty as to whether the momentum at the end of last year can be sustained.”

Chinese stocks had gained in the last few trading sessions of 2023, helped by year-end position adjustments and a jump in foreign buying. But the CSI 300 Index still ended 2023 with an unprecedented third year of losses after annual foreign purchases of the nation’s equities shrank to the least on record.

Global funds sold a net 5.3 billion yuan ($743 million) of onshore equities on Tuesday, the biggest one-day outflow since Dec. 13. 

READ: Year-End China Market Rally Takes Hold as Foreign Funds Pile In

But some including Matthews Asia see the weakness as a buying opportunity. Almost a third of 417 respondents in Bloomberg’s latest Markets Live Pulse survey said they will increase their China investments over the next 12 months, compared with just 19% in a similar August poll.

“China is a market that is out of favor so that enables us to buy stocks relatively cheap,” said Vivek Tanneeru, a portfolio manager for Matthews Asia in San Francisco. Tanneeru has overweight positions in Chinese equities in the two emerging markets portfolios he oversees.

(Updates with closing levels. An earlier version of this story was corrected to say 2024 in the first paragraph)

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