The Hang Seng Index sank 3.7 per cent to 15,276.90 on Wednesday, the lowest since October 2022. Today’s drop is also the steepest one-day pullback in 15 months. The Tech Index tumbled 5 per cent while the Shanghai Composite Index retreated 2.1 per cent.
Alibaba Group fell 4 per cent to HK$65.65 and peer JD.com slipped 6.1 per cent to HK$87.75, while Tencent slid 2.8 per cent to HK$274.60. HSBC led financials lower, losing 2 per cent to HK$57.95, while AIA Group plunged 4.7 per cent to HK$59.60 and ICBC fell 2.5 per cent to HK$3.55.
Longfor Group plummeted 6.8 per cent to HK$8.86, and peer China Resources Land slid 4.3 per cent to HK$23.15 while rival China Overseas Land dropped 6.3 per cent to HK$11.22 after new home prices fell across major mainland Chinese cities.
“Pessimism in China is all but entrenched now,” equity strategists at Bank of America said in the report. “Chronic disappointment has turned investors away from Chinese equities.”
‘Chronic disappointment’ with Chinese stocks prompts big cut in fund allocation
‘Chronic disappointment’ with Chinese stocks prompts big cut in fund allocation
Hong Kong’s stock benchmark has lost more than 10 per cent this year, the worst start to a year since 2016, amid heightened concerns about China’s economic outlook as its stimulus measures failed to drive a stronger recovery, according to BCA Research, a Montreal-based research firm.
The People’s Bank of China left its policy lending rate unchanged for a fifth month earlier this week, suggesting it was worried about undermining the local currency.
The decision to keep rates unchanged suggests policymakers are unconvinced that marginal rate cuts will boost economic conditions, BCA said. Depressed private sector sentiment amid the weak property market is dampening the effectiveness of policy stimulus, it added.
“Chinese policymakers’ reluctance to stimulate meaningfully underscores that China is unlikely to be a meaningful source of growth for the global economy,” the firm said. “It will take more economic pain to compel policymakers to cut interest rates.”
Foreign investors sold 13.1 billion yuan (US$1.8 billion) of onshore-listed shares via the Stock Connect links on Wednesday, the biggest sell-off since late October 2022, according to Bloomberg data.
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Other December data was mixed, with retail sales trailing estimates and industrial production beating projections, the statistics bureau said.
“The GDP data has been fueling panic selling among investors, who now expect more cuts in corporate earnings forecasts,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “On the other hand, that has also raised hopes of more stimulus measures.”
Other major Asian markets all headed south. Japan’s Nikkei 225 dropped 0.4 per cent, while South Korea’s Kospi retreated 2.5 per cent and Australia’s S&P/ASX 200 lost 0.3 per cent.