Hong Kong stocks suffer worst month since August 2018 as China’s tech clampdown sparks stampede to the exits
- Hang Seng Index retreated by almost 10 per cent this month, exceeding the 9.7 per cent slump during the pandemic-driven sell-off in March 2020
- Losses are stirring debates about China’s policy risks as stocks dominate emerging-market benchmarks
The Hang Seng Index fell 1.4 per cent to 25,961.03 on Friday, dragging the benchmark to a 5 per cent loss for the week. The blue-chip index lost almost 10 per cent for the month of July, the most since a 10.1 per cent drop in August 2018, according to Bloomberg data.
The Hang Seng Tech Index declined 2.6 per cent, bringing the slide to 16.9 per cent this month as 27 of its 30 members fell. Tencent Holdings slipped 2.6 per cent to HK$479. Meituan tumbled 5.9 per cent to HK$215 and Alibaba Group Holding retreated 4.2 per cent to HK$189.
The rout sparked by China’s clampdown on private education firms since July 23 has erased at least US$860 billion of market value in Hong Kong and mainland markets through Thursday. A measure of market volatility hit the highest level in about 14 months as foreign investors dumped their holdings.
“Technical buying is fading,” said Alex Wong, a director at Ample Finance Group in Hong Kong. “Foreign investors who recently exited the market will not return so quickly unless Beijing dramatically reverses its policy stance.” After the latest crackdown, investors will rethink owning Chinese stocks as a long-term holding, he added.
This month’s losses, starting with the cybersecurity review of ride-hailing firm Didi Chuxing, have stunned global funds who deemed Chinese stocks as a core holding as they gained more weight in global equity benchmarks. The Hang Seng and CSI 300 Index have trailed the MSCI World Index by the widest margins since early March.