Hong Kong stocks pare gains as China’s liquidity injection fails to inspire while crypto-linked firms sink on crackdown

Hang Seng Index lost almost all its advance with no sign of resolution to Evergrande’s debt crisis while crypto-linked stocks slumped
CNOOC jumped on a plan to raise US$5.4 billion from onshore stock offering

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Iris Ouyang

Published: 10:52am, 27 Sep, 2021

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Hong Kong stocks lost nearly all of its rally as China’s efforts to inject more liquidity into the banking system failed to spur risk appetite amid a liquidity crunch at Evergrande. Cryptocurrency -related stocks plunged on regulatory crackdown.

The Hang Seng Index was little changed at 24,208.78 at the close of Monday trading, after advancing as much as 1 per cent. The Hang Seng Tech Index fell 0.9 per cent to the lowest level since August 23. The Shanghai Composite Index declined 0.8 per cent.

The People’s Bank of China pumped 100 billion yuan (US$15.5 billion) into the local banking system through open market operations on Monday, supplementing net liquidity injection of 510 billion yuan in the preceding six days.

HSBC, Ping An Insurance and China Merchants Bank gained more than 1 per cent while state-controlled oil explorer CNOOC surged 5.1 per cent after announcing a plan to raise about 35 billion yuan through a listing in Shanghai. Meituan, meanwhile, jumped 1.6 per cent. Tencent Holdings rose 1 per cent.

Earlier gains were just a technical rebound while sentiment is “still bad”, said Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong. Traders are waiting for more data to gauge the economic slowdown, he added.

Cryptocurrency-related stocks slumped after Beijing banned all transactions in the latest crackdown on digital currencies. Huobi Technology plummeted 21.5 per cent while OKG Technology crashed 19.1 per cent and Meitu dropped 7.3 per cent.

Also tempering gains, some major industrial groups slumped on concerns power cuts in several mainland provinces will dent operations. Aluminum Corporation of China fell by 10 per cent in Shanghai and 6.3 per cent in Hong Kong.

02:27

Cryptocurrency volatility highlighted by China’s recent crackdown and Elon Musk comments

Chinese companies have warned of losses following a wave of power rationing in at least 10 provinces, including the manufacturing hubs of Guangdong, Anhui, Zhejiang and Jiangsu over the past two weeks, forcing factories to halt production.

Elsewhere, China Evergrande jumped 8.1 per cent. Its electric-car manufacturing unit slumped 9.4 per cent after scrapping a plan to raise more than US$5 billion from a domestic stock offering. The EV maker has depleted its cash to pay suppliers and contractors and halted some projects, it said on Friday.

In mainland markets, liquor distiller Kweichow Moutai surged 9.5 per cent after its new chief executive pledged to restrain distributors from raising prices, a move that aided stock momentum, according to China Asset Management. Wuliangye Yibin and Luzhou Laojiao both rallied by 10 per cent.

Shandong Kaisheng New Materials began trading for the first time in mainland China, with the stock surging 548 per cent to 33.50 yuan.

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