Most Hong Kong stocks slide on concerns Covid lockdowns to leave China behind the curve in arresting economic slump
- Stocks revisited March 15’s low as China’s go-slow approach on stimulus could leave policy makers behind the curve in arresting economic losses
- HSBC, Hang Seng Bank and Country Garden led losses while an overnight sell-off in US equities rattled investors in Asian trading
The Hang Seng Index was little changed near a six-week low of 19,946.36 at the close of Wednesday trading as 40 of the 66 index members declined. HSBC and Hang Seng Bank tumbled more than 2 per cent. The Tech Index rebounded 1.7 per cent after wavering between gains and losses.
The Shanghai Composite Index rallied 2.5 per cent, rebounding from a two-year low while the Shenzhen Component Index jumped 4.4 per cent amid as economists called for more policy stimulus. The Shanghai benchmark has lost 7.9 per cent since March 28 when authorities started locking down the city to control the Omicron wave.
“The market is worried that earnings from some of the bellwether companies will fall short of expectations,” said Lu Bin, chief investment officer at HSBC Jintrust Fund Management in Shanghai. “Investors are pessimistic about results in the first quarter and the current quarter.”
On the flip side, Haidilao surged 11 per cent to HK$15.04 and JD.com added 3.6 per cent to HK$219.80.
02:31
Beijing orders mass testing as Chinese capital braces for Omicron surge
Chinese port activity fell below levels seen during the first coronavirus outbreak in 2020 and construction has plummeted, satellite data show, suggesting official economic figures are likely to worsen as Covid lockdowns spread, Bloomberg reported, citing satellite data and images.
President Xi Jinping has called for efforts to boost infrastructure construction in the areas including transport, energy and water conservancy, following a meeting of the Central Committee for Financial and Economic Affairs, the state-run Xinhua News Agency reported on Tuesday. He also urged increased fiscal spending and widening funding channels.
“Given the backdrop that exports growth is likely to slow, zero-Covid policy may stay for much of this year and hurt consumption and services, and private investment is likely to remain weak, we believe infrastructure investment should be one key policy lever to stabilise growth,” Goldman Sachs said.
00:54
Storm rips through locked down Shanghai, tearing down Covid-19 checkpoints
China is shifting its focus to Beijing as residents started hoarding food and essential supplies in anticipation of movement curbs. While Covid-19 cases in Shanghai have decreased in recent days, business and consumer confidence have suffered under a month of citywide lockdown.
Markets in Asia-Pacific weakened. The benchmark in South Korea and Japan slipped by at least 1 per cent while equities in Australia retreated 0.8 per cent. Stocks in the US tumbled overnight, following an almost 4 per cent rout in the Nasdaq Composite Index amid concerns about inflation and corporate earnings outlook.
