The Hang Seng Index fell 1.5 per cent to 17,904.81 as of 10am local time, and a close below 18,000 would be the first such instance since April 30. The Hang Seng Tech Index slid 1.4 per cent and the Shanghai Composite Index was little changed.
“The deflationary pressure has not faded yet,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management in Hong Kong. “A more comprehensive and proactive policy stance covering fiscal, monetary, and property sector may be necessary to boost domestic demand more effectively.”
Hong Kong property developers weakened over concerns elevated interest rates will raise the cost of home purchases ahead of the US Federal Reserve’s rate-setting meeting on Thursday. Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the US dollar. New World Development tumbled 3.7 per cent to HK$7.76 and Wharf Real Estate Investment fell 2.4 per cent to HK$20.06.
Tencent Holdings slipped 0.2 per cent to HK$373.20 and Alibaba Group Holding lost 0.8 per cent to HK$74.30.
The Fed is widely expected to leave the benchmark borrowing cost unchanged in its June policy meeting to fight entrenched inflation, but concerns swirl officials will dial back expectations of interest rate cuts for the rest of the year.
Wuhan Dameng Database, which offers database services to bank and state grids, jumped 200 per cent from its initial public offering price to 260 yuan on the first day of trading in Shanghai.
Other major Asian markets were mixed. Japan’s Nikkei 225 slipped 0.8 per cent and Australia’s S&P/ASX 200 added/lost 0.6 per cent, while South Korea’s Kospi rose 0.4 per cent.