Alibaba, JD.com put Hong Kong stocks on slippery slope before US inflation report while traders look for China market signals
- Markets wary as US consumer prices appear to be sticky, with economists forecasting an 8.1 per cent rise in September versus 8.3 per cent in August
- The Hang Seng Index completed a sixth day of losses, the longest stretch of pain since September
Corrected [11:32am, 13 Oct, 2022]
- [11:32am, 13 Oct, 2022]
Corrects reference to longest losing streak in first and second paragraph
Hong Kong stocks fell for a sixth day, dragging the benchmark index to its longest losing streak in five weeks, as caution prevailed before a US government report on inflation. Traders kpet positions light, looking out for market signals before the Communist Party congress this weekend.
The Hang Seng Index dropped 1.9 per cent to 16,389.11 at the close, capping the longest drubbing since September. The six-day loss totalled 9.4 per cent. The Tech Index slumped 3.4 per cent, while the Shanghai Composite Index erased an earlier advance to lose 0.3 per cent.
Alibaba Group weakened 2.2 per cent to HK$72.75, while Tencent Holdings retreated 2.9 per cent to HK$246.20 and JD.com lost 4.7 per cent to HK$176.60. China Merchants Bank tumbled 4 per cent to HK$30.10, and Hong Kong Exchanges and Clearing also slid by that much to HK$258.40.
Kuaishou Technology fell 4.5 per cent to HK$47.60, while NetEase slumped 4 per cent to HK$109.80. Chinese developers Longfor and Country Garden pulled property stocks down, each losing more than 6 per cent.
Global markets are on edge with traders wary of an extended run of interest-rate increases by the Federal Reserve. US consumer prices probably rose 8.1 per cent in September from a year earlier, versus 8.3 per cent in August, according to a consensus among economists tracked by Bloomberg before an official report on Thursday.
“The hawkish stance by the Federal Reserve isn’t likely to ease in the short term,” said Zhang Yidong, a strategist at Industrial Securities in Shanghai. “The backdrop of liquidity tightening is still there and the risk from overseas is not going away any time soon.”
Elsewhere, carrier Cathay Pacific Airways slumped 3.2 per cent to HK$7.79 on report Hong Kong is unlikely to further ease local travel restrictions. Rusal sank 3.9 per cent to HK$3.20 on speculation the US is mulling sanctioning the Russian aluminium smelter.
Still, one technical indicator suggests a rebound in the Hang Seng Index may be imminent. The gauge’s 14-day relative-strength index fell below the 30-point threshold this week, a sign the 8.2 per cent sell-off in the past three weeks may be overdone.
The Communist Party holds its 20th national congress starting on Sunday. The once-in-five-years event will see more than 2,000 party representatives nominate and select leaders for the Central Committee, Politburo, and Politburo Standing Committee.
The Party Congress has historically been a positive anchor for the economy and equity markets, at least in the short run, Goldman Sachs analysts wrote in a report last month. Macro growth momentum has usually been robust leading up to the event in both absolute and output gap terms, with the macro policy stance typically staying supportive, they said.
Kweichow Moutai dropped 3.4 per cent to 1,699.99 yuan in Shanghai. The liquor producer said net income for the first three quarters probably rose 19.1 per cent from a year earlier. China International Capital Corp said it would trail market expectations.
Eastroc Beverage, which makes energy drinks and bottled water, surged in Shanghai on panic buying of drinking water after a statement by the local water plant on suspension of supply in 10 areas in the commercial hub. The stock gained 4.6 per cent to 137.30 yuan.
Three companies rose on their first day of trading. Software developer Hydsoft Technology surged 255 per cent to 26.97 yuan in Shenzhen. Tools maker Acter Technology Integration Group jumped 44 per cent to 39.24 yuan in Shanghai. Wuxi Yinow Electric Equipment soared 70 per cent to 8.49 yuan in Beijing.
Major Asian markets all headed south on Thursday. Japan’s Nikkei 225 slid 0.6 per cent, and South Korea’s Kospi lost 1.8 per cent while Australia’s S&P/ASX 200 slipped 0.1 per cent.