Alibaba, HSBC, AIA pace rout in Hong Kong on Taiwan tensions as China promises ‘firm and strong’ measures against Pelosi’s visit

All save two of Hang Seng Index members slipped on rising cross-strait tensions over Pelosi’s impending visit to Taipei late Tuesday

China has promised ‘firm and strong’ measures over the visit, as it considers Taiwan as a renegade province and its internal affairs

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A man stands in front of the jumbo screen showing the latest economic and market updates in Shanghai on June 23. Photo: EPA-EFE

Published: 10:25am, 2 Aug 2022Updated: 11:50pm, 2 Aug 2022

Hong Kong stocks tumbled to the lowest in more than two months as a planned visit to Taipei by US House Speaker Nancy Pelosi heightened cross-strait tensions with China promising to retaliate. A slowdown in the city’s economy also hurt risk-taking.

The Hang Seng Index slumped 2.4 per cent to 19,689.21 at the close of Tuesday trading the lowest level since May 12. All four of the benchmark’s industry groups – finance, property, utilities and industry lost between 0.7 per cent and 2.4 per cent. The Tech Index sank 3 per cent with no winner, while the Shanghai Composite Index fell 2.3 per cent.

Alibaba Group Holding tumbled 2.8 per cent to HK$87.05, while Tencent Holdings slumped 1.5 per cent to HK$295 and Meituan retreated 2.1 per cent to HK$176.20. HSBC fell 1.6 per cent to HK51, giving up part of Monday’s 5 per cent rally. AIA Group retreated 2.8 per cent to HK$75.05.

“In the case of any direct armed conflict between China and the US, risk assets could be hammered, with Taiwan and Chinese assets getting hurt particularly badly,” Chen Zhao, chief global strategist at Alpine Macro in Montreal, said in a special report. “We believe that the current political backdrop makes a military response from China very likely.”

Other stocks from smartphone maker Xiaomi to developer Country Garden and Macau casino operator Sands China slumped by 4 per cent or more. The Hang Seng’s next support level is 19,178 points, according to Kenny Wen, head of investment strategy at KGI Asia, a level not seen since the market rout in mid-March.