Alibaba, BYD drag Hong Kong stocks to six-week low as Covid-19 cases, tech fines crimp optimism
- China’s zero-Covid policy and regulatory crackdown continue to be tough hurdles for a sustained recovery in stocks
- Latest penalties on Alibaba, Tencent, Bilibili and others deliver new shock just as investors are letting down their guard with bullish tones for the second half
The Hang Seng Index retreated 1.3 per cent to 20,844.74 at the close of Tuesday trading, the lowest level since May 27. The Tech Index lost 2.1 per cent, while the Shanghai Composite Index fell 1 per cent.
Alibaba Group Holding, the owner of this newspaper, sank 5.4 per cent to HK$107.80, while Country Garden Holdings lost 3.4 per cent to HK$4.01. Tencent weakened 1.3 per cent to HK$337.80 and Meituan fell 2 per cent to HK$178, while Wuxi Biologics retreated 2.9 per cent to HK$74.85.
“The zero-infection policy doesn’t work and it is hurting the economy, [any market recovery will] continue to be buffeted” by this strategy, said Francis Lun, chief executive at Geo Securities. “[We] should be very pessimistic about the Chinese economy,” he added.
Hotpot chain Haidilao rose 1.5 per cent to HK$16.24 after announcing a plan to spin 0ff its restaurant business outside Greater China and seek a separate Hong Kong listing for the unit. The overseas business only accounted for 3 per cent of its gross revenue in 2021, according to its annual report.
Chinese infrastructure stocks rose after the government issued a plan that aims to build a vast network of expressways by 2035. The CSI300 Infrastructure Index rose 1 per cent, led by gains in Power Construction Corporation and China Communications Construction.
Investors will look to trade data from China on Wednesday, while retail and gross domestic product and property investment comes out Friday. The data dump will undoubtedly drive most of the volatility this week, said Carlos Casanova, Asia senior economist at Union Bancaire Privee.
Jiangxi Tianxin Pharmaceutical surged 44 per cent to 53.11 yuan in its trading debut in Shanghai, while Zhejiang Chenguang Cable Company was little changed at 4.30 yuan in Beijing. In Hong Kong, Sinohealth Holdings was unchanged at HK$5.36, while Readboy Education Holding sank 5.3 per cent to HK$7.20.
Major Asian markets fell on Tuesday. Japanese and South Korean stocks lost 1 to 1.8 per cent, while Australian equities were little changed.