Hong Kong stock rebound on pause after recouping US$570 billion in market value since March, as health stocks lead decline

The Hang Seng Index slid 2.6 per cent on Wednesday, after rising 3.4 per cent over the past three days and 17 per cent since a six-year low in March

Alibaba Health and JD.com led the decline after a media report said Beijing may tighten regulation of online medicine sales, while EV maker Li Auto gained

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A woman walks past a bank’s electronic board showing the Hong Kong share index in Hong Kong on June 21, 2022. Photo: AP

Published: 10:35am, 22 Jun 2022Updated: 4:47pm, 22 Jun 2022

Hong Kong stocks dropped Wednesday, ending a three-day streak of gains, with health-related stocks leading the decline.

The Hang Seng Index slumped 2.6 per cent to 21,008.34 at the close, ending a string of positive sessions that saw it gain 3.4 per cent. The loss was the biggest since June 13. The Hang Seng Tech Index shed 4.4 per cent, while the Shanghai Composite Index sank 1.2 per cent.

Alibaba Health Information Technology and JD.com led the decline on the benchmark, retreating at least 6 per cent after the 21st Century Business Herald reported that China will increase scrutiny of online medicine sales. Li Auto bucked the decline on the broader market after Citigroup more than doubled its price target for the stock.

The Hang Seng Index had risen 17 per cent through Tuesday since hitting a six-year low in March, thanks to China’s Covid-19 wave receding and new government policies to revive growth. The rebound added US$570 billion in market capitalisation, with Hong Kong unseating Japan to retake the position of the second-biggest stock market in Asia.

“The rebound on Hong Kong stocks is expected to extend into the second half, with the easing of the headwinds such as the pandemic and the Russia-Ukraine conflict,” said Xu Guanghong, an analyst at Citic Securities. “China’s economic fundamentals have already hit the bottom and corporate earnings are also expected to rebound, given the pro-growth measures that have been enacted.”