Hong Kong stocks slide, approaching six-year low as energy crisis from Ukraine war heightens recession fears

Stocks failed to gain any traction despite an early bounce, as surging oil prices the global economy into a recession

Slowing inflation in China brightens outlook for stronger stimulus from policymakers to support its 5.5 per cent GDP target

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Two men chat in front of an electronic sign showing the Hang Seng index in Hong Kong on March 9, 2022. Photo: AFP

Published: 11:00am, 9 Mar 2022Updated: 5:12pm, 9 Mar 2022

Hong Kong stocks slid for a fourth day toward a six-year low as surging energy costs induced by the Russia-Ukraine war heightened recession fears. Traders bet China will step up stimulus efforts as higher oil prices are seen undermining its growth target.

The Hang Seng Index fell 0.7 per cent to 20,627.71 at the close, capping an 8.2 per cent loss over four days in the market’s worst run this year. The Tech Index gained 0.3 per cent, reversing a 3.4 per cent intraday loss, while the Shanghai Composite Index declined 1.1 per cent.

Chinese sportswear maker Li Ning slumped 9.4 per cent after Norway’s sovereign wealth fund excluded the stock for investment, citing human right violations. Anta Sports and Country Garden slumped more than 7 per cent. Alibaba Group dropped 0.7 per cent.

The latest slump pushed almost 40 per cent of the Hang Seng Index members into an oversold territory, the highest proportion in two years, according to Bloomberg data. Other major markets in Asia-Pacific stabilised, with stock gauges in Australia and Taiwan posting gains.

Crude oil futures traded around US$120 a barrel, approaching the 2008 peak while prices of nickel and wheat surged to record highs this week. The US and UK plan to ban oil imports from Russia amid widening sanctions. Slower growth amid runaway inflation could drag economies into a recession, strategists at Alpine Macro has said.

“There is still plenty of pain out there amid the crazy volatility,” said Stephen Innes, a partner at SPI Asset Management. “The longer commodities stay trading at such elevated levels, the probability of stagflation is rapidly increasing. It is too early to bottom fish.”