Hong Kong stocks tumble as Fed makes hawkish policy downshift and China’s November data trails market consensus
- The Federal Reserve says it has a ‘ways to go’ in fighting inflation, adding that it is premature to expect a rate cut
- China’s retail sales, industrial production both missed market consensus as slowdown deepened in November
The Hang Seng Index dropped 1.6 per cent to 19,368.59 at the close, keeping the market near a three-month high as the city’s monetary authority raised its base rate in lockstep with the Fed. The Tech Index slumped 2.4 per cent while the Shanghai Composite Index retreated 0.3 per cent.
Interest rate-sensitive stocks led losses. Country Garden Services slid 1.5 per cent to HK$18.68, and developer Longfor Group fell 0.6 per cent to HK$25.30. HSBC fell 1.8 per cent to HK$47.20, and its subsidiary Hang Seng Bank slipped 0.4 per cent to HK$127.70. Alibaba Group retreated 4 per cent to HK$85.90, and Meituan lost 3.3 per cent to HK$176.80.
“The comments indicate that there is more work to do on inflation and rates are expected to still move higher and [stay] above their long-term target for longer,” said Raf Choudhury, investment director of multi-asset solutions at UK money manager Abrdn in Sydney. “We expect a slump in demand for goods as economic growth contracts as financial conditions tighten even further.”
“China’s economy is rolling with the last punches from Covid and getting through tough times,” said Bruce Pang, chief economist at Jones Lang LaSalle in Hong Kong. “With a faster pace of relaxation, we expect only a short-lived exit wave and associated disruption on production and consumption in the coming months. Policymakers are expected to prioritise economic growth on all fronts.”
Seven companies started trading in Hong Kong and the mainland. In the city, biopharmaceutical firm 3D Medicines surged 26 per cent to HK$31.45, while snack maker Weilong Delicious Global Holdings slipped 5.1 per cent to HK$10.02 and autopart maker Buyang International slumped 40 per cent to HK$0.30.
Mechanical part maker Zhejiang FORE Intelligent Technology jumped 20 per cent to 26.78 yuan in Shenzhen, and Ningbo Sinyuan ZM Technology, which makes casting products, also gained 20 per cent to 41.14 yuan. Fujian Guohang Ocean Shipping sank 7.1 per cent to 4.83 yuan in Beijing, and Beijing Competitor Sports Science Technology, which makes sports nutrition foods, fell 2 per cent to 7.84 yuan.
Other major Asian markets all declined. Japan’s Nikkei 225 slipped 0.4 per cent per cent, while South Korea’s Kospi retreated 1.6 per cent and Australia’s S&P/ASX 200 lost 0.6 per cent.