Hong Kong stocks hit three-week low as buying support from mainland funds wanes on slowdown, geopolitical concerns

Hang Seng Index declined after a holiday on Monday, with property developers and banks leading losses
Xtep surged by a record 21 per cent to an all-time high after a strategic investment deal with Chinese private equity firm Hillhouse Capital

Stocks

Iris Ouyangin Shenzhen

Published: 10:56am, 15 Jun 2021

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Hong Kong stocks fell to a three-week low as buying support from mainland investors waned while the Group of Seven and Nato rebuked China over its economic and military plans.

The Hang Seng Index retreated 0.7 per cent to 28,638.53 on Tuesday, following a 0.3 per cent setback last week. The Shanghai Composite Index retreated 0.9 per cent to 3,556.56.

Property developers were among the biggest losers amid concerns China is tightening its scrutiny on lending to the sector to contain financial risks. Country Garden fell 2.7 per cent, China Evergrande and China Vanke and China Overseas Land tumbled more than 2 per cent.

Banks also declined. Citic dropped 2.6 per cent. BOC Hong Kong retreated and Bank of China retreated 1.8 per cent, Bank of Communications shed 1.5 per cent.

“Investors are waiting for better visibility [on some factors], such as [antitrust] regulations on tech companies when there’s little catalyst,” said Chi-man Wong, head of research at China Galaxy International Securities in Hong Kong. “Trading volume is low and people do not have a strong view on market direction.”

Daily inflows via the Stock Connect’s southbound channel averaged HK$383 million (US$49.3 million) so far this month through Friday, compared with HK$2.5 billion in April and HK$2.6 billion in May, according to exchange data compiled by Bloomberg. Slowing recovery momentum and faster inflation are among market headwinds.

Other notable loser was hotpot restaurant chain Haidilao. The stock slid 1.6 per cent to HK$39.15 after narrowed the drop of more than 6 per cent, as Credit Suisse lowered its target price by one-third to HK$50 amid concerns over shrinking sales.

Elsewhere, the North Atlantic Treaty Organization or Nato issued a statement late Monday, saying China presented “systemic challenges” and vowed to counter Beijing’s rise. The G7 session in England also concluded over the weekend with an unprecedented unity on issues related to China. China has rejected the idea the nation is a threat to Western powers.

Xtep International rallied 21 per cent to the record high of HK$10.72. Hillhouse Capital agreed to buy HK$500 million (US$64.4 million) of its convertible bonds. The private equity firm also agreed to buy US$65 million of convertible bonds issued by its subsidiary Xtep Global to develop the K-Swiss and Palladium brands of footwear.

Other sportswear brands rode the optimism, with 361 Degrees surging 8.6 per cent, Li Ning advancing 3.6 per cent and Anta Sports up 2.7 per cent.

US equities rose overnight on Wall Street, S&P 500 and Nasdaq surged to record high as investors snapped up growth stocks ahead of the Federal Reserve’s two-day policy meeting starting on Tuesday. Traders are closely monitoring the Fed officials’ views on inflation and whether the Fed’s plan on asset purchases and interest rate.

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