Hong Kong stocks retreat from 3-week high as traders struggle for catalysts to sustain China reopening bets

Rising coronavirus infections undermine market optimism about an imminent end to China’s zero-Covid policy
Stocks in Hong Kong have gained US$430 billion in market capitalisation from this month’s rally

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:38am, 8 Nov, 2022

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Hong Kong stocks fell from a three-week high as traders locked up gains from the past five-day rally while looking for catalysts to support China reopening bets. A growing number of Covid-19 cases is challenging that optimism.

The Hang Seng Index slipped 0.2 per cent to 16,557.31 at the close, snapping a powerful 13 per cent surge this month. The Hang Seng Tech Index dropped 1.6 per cent and the Shanghai Composite Index fell by 0.4 per cent.

Alibaba Group Holding retreated 3.7 per cent to HK$67.10 and Meituan slumped 2.8 per cent to HK$148.80 while Baidu lost 2.6 per cent to HK$83.65 after China’s cybersecurity regulator hinted the curbs on the tech sector will remain. Budweiser declined 3 per cent to HK$18.96. Limiting losses, Macau casino operator Sands China added 3.6 per cent to HK$17.66 and Country Garden gained 2.1 per cent to HK$1.44.

Stocks in Hong Kong have gained US$430 billion in capitalisation over the past week as investors speculated China will end its zero-Covid policy sooner, because of the rising costs to the economy.

“While Hong Kong stocks may have bottomed out, volatility will increase going forward and there’s still uncertainty about the strength of this rebound,” said Dai Qing, an analyst at Guotai Junan Securities. “The market may overestimate the pace of China’s easing of Covid restrictions.”

01:53

Hong Kong’s financial summit ends on an upbeat note as city heads ‘back to business’

Today’s retreat followed a government report showing 7,323 new Covid-19 infections in mainland China, the most since April 30, challenging calls for an end to Beijing’s zero-Covid policy. China’s health authority said on Saturday it would “unswervingly” continue to enforce the stringent curbs.

Hua Hong Semiconductor retreated 3 per cent to HK$22.30 and Semiconductor Manufacturing International Corp dropped by as much as 0.8 per cent before closing 0.4 per cent higher at HK$16.94. China’s chip imports slumped by 13 per cent in the first 10 months, highlighting the US-China tech challenges on advanced chips.

01:50

Lockdown around world’s largest iPhone factory in China fans production worries

China’s exports unexpectedly slumped last month for the first time since May 2020, as Covid-19 infections affected factory production and shipments. Weak external demand also contributed to the slump, after monetary policy tightening in major economies stoked recession fears.

Medical device maker Lepu Scientech Medical Technology was unchanged at HK$29.15 on the first day of trading in Hong Kong. Fujian South Highway Machinery rose by the 44 per cent daily limit to 34.20 yuan in its Shanghai debut.

Other major Asian markets all rose before a US government report later this week that is expected to show inflation slowed in October. Japan’s Nikkei 225 gained 1.3 per cent and South Korea’s Kospi added 1.2 per cent, while Australia’s S&P/ASX 200 climbed 0.4 per cent.

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