Alibaba, SMIC, Sands drag Hong Kong stocks as US banking crisis infects markets before likely Fed rate hike
- US equities fell overnight amid steep losses in regional banking stocks after regulators seized First Republic Bank
- The Federal Reserve is expected to raise its target rate again later today in what analysts said could be the final hike in 2023
The Hang Seng Index lost 1.2 per cent to 19,699.16 at the close of Wednesday trading, the lowest level since April 26. Ten out of 11 members in the finance sub-gauge weakened. The Tech Index slumped 1.6 per cent. Markets in mainland China are closed for a holiday.
Alibaba Group retreated 2.4 per cent to HK$80.35 while Tencent fell 1.9 per cent to HK$339.40. Chip maker SMIC declined 3.1 per cent to HK$21.80 while developer Country Garden slumped 3 per cent to HK$1.92. Casino operator Sands China fell 4.9 per cent to HK$26.95, while Hang Seng Bank slid 2.2 per cent to HK$113.20.
The S&P 500 Index tumbled overnight, with regional lenders PacWest Bancorp and Western Alliance Bancorp crashing by more than 15 per cent. US regulators seized First Republic Bank and sold the lender to JPMorgan Chase to help restore confidence.
Meanwhile, the market is bracing for potential fallout from another likely round of policy tightening. The Federal Reserve is expected to raise its key rate by 25 basis points to a range of 5 per cent to 5.25 per cent later today, according to fed fund futures, with the Hong Kong Monetary Authority to follow in lockstep by policy design.
“The Fed has some room to take a wait-and-see approach because the regional bank failures have added some kind of pressure to the market,” said Dickie Wong, executive director of research at Kingston Securities.