Alibaba, Li Ning lead Hong Kong stock sell-off as Beijing falls ‘behind growth curve’ while Nio jumps on fund purchase

China stock bulls retreated further as Beijing offers a targeted stimulus to shore up the nation’s faltering economic recovery

Nio jumped as a Middle East investor agreed to purchase a 7 per cent stake in the Chinese EV start-up

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The Hang Seng Index has lost 4 per cent this week, putting it on course for the deepest three-day sell-off in four weeks. Photo: EPA-EFE

Published: 10:38am, 21 Jun 2023Updated: 4:53pm, 21 Jun 2023

Hong Kong stocks slumped towards the worst sell-off in almost four weeks as confidence among investors waned given China’s limited stimulus to shore up its faltering economic recovery. Nio advanced after a Middle East fund bought a stake in the electric-car maker.

The Hang Seng Index slipped 2 per cent to 19,218.35 at the close of Wednesday trading. The city’s benchmark has lost about 4 per cent this week, the deepest three-day setback since May 29. The Tech Index sank 2.8 per cent while the Shanghai Composite Index declined 1.3 per cent.

Alibaba Group tumbled 4.1 per cent to HK$84.70 while Tencent declined 2.7 per cent to HK$340.40 and Baidu lost 1.7 per cent to HK$140.30. Sportswear brand Li Ning dropped 5.4 per cent to HK$43.95 and peer Anta Sports fell 5.5 per cent to HK$81.45 on concerns about weak consumer spending.

“Investors expect aggressive stimulus to revive the economy,” Arthur Budaghyan, chief China strategist at BCA Research, said. “However, policymakers will remain behind the growth curve and therefore, investors will be disappointed. The upshot is that Chinese share prices will continue to decline.”

A waning confidence in China’s policy stimulus prompted a fresh round of cutbacks in Chinese growth forecasts by analysts at Wall Street and Japanese brokerages. More than US$86 billion has been erased from Hang Seng Index’s 76 members this week, while the Tech Index members lost US$51 billion.

Wuxi Biologics fell 2.6 per cent to HK$37.75, adding to a 17 per cent slump on Tuesday, after the biotech firm told selected investors and analysts about weak revenue outlook in the second half during a roadshow.