Stocks sink in Hong Kong, mainland China as Covid spreads to Beijing with district lockdown adding to cracks in economy

Beijing, a city of more than 20 million people, has locked down dozens of residential compounds and told residents in eastern Chaoyang district to undergo tests

Lockdowns are weighing on the economy with broken supply chains, factory closures and port congestion

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People wait in line to enter a supermarket following the Covid-19 outbreak in Beijing on April 25. Photo: Reuters

Published: 10:41am, 25 Apr 2022Updated: 5:04pm, 25 Apr 2022

Stocks in Hong Kong slumped and those in mainland China tumbled by the most in more than two years as Covid-19 outbreak spread to Beijing with some areas in the capital coming under lockdown, heightening economic losses.

The Hang Seng Index sank 3.7 per cent to 19,869.34 at the close, its lowest level since March 15, while the Hang Seng Tech Index plunged 4.9 per cent.

The Shanghai Composite Index retreated 5.1 per cent to 2,928.51, the steepest sell-off since February 2020 as the financial hub reported record fatalities overnight. In Shenzhen, the Component Index plunged 6.1 per cent while the nation’s currency weakened to a one-year low of 6.553 per US dollar.

“The market is panicking and worried if the pandemic will get out of control,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “The market needs to correct further as expectations on reopening are too optimistic. The lockdown measures will cause permanent damages to some supply chains.”

All but four of the 66 Hang Seng Index members fell. Alibaba Group Holding slid 5.5 per cent to HK$81.85 and Tencent Holdings lost 3.9 per cent to HK$327.40 while hotpot restaurant chain Haidilao crashed 16 per cent to HK$12.92.