Hong Kong stocks slide as Tencent, Country Garden retreat amid China virus fight, recession concerns
- China’s reopening pivot has led to new challenges for Beijing, chiefly a spike in Covid-19 infections
- Policy tightening moves by the Federal Reserve, other global central banks continue to stoke recession concerns
The Hang Seng Index fell 1.3 per cent to 19,094.80 at the closing of Tuesday trading, adding to a 0.4 per cent loss on Monday. The Tech Index tumbled 3.1 per cent while the Shanghai Composite Index declined 1.1 per cent.
“The market is worried about the development of the epidemic in the mainland,” said Kenny Ng, a strategist at Everbright Securities in Hong Kong. “Investors also lack motivation” to make fresh stock bets as the year-end holiday approaches, he added.
Elsewhere, mainland lenders kept their key lending rates on hold at the monthly rate-setting decision. The one-year loan prime rate remained at 3.65 per cent while the five-year rate used as a benchmark for home mortgages held at 4.3 per cent, according to data published by the National Interbank Funding Centre.
Analysts at Saxo Markets said the lack of more forceful stimulus measures to rejuvenate economic growth during the Central Economic Work Conference in Beijing last week was “underwhelming.”
While China’s economy is forecast to recover in 2023, the nation’s exports are likely to contract because “we expect many developed market economies to fall into recession as high inflation and interest rates choke off demand,” according to Schroders. “The expected slump in exports puts the onus on domestic demand to drive any recovery” in China, the UK money manager said.
The Federal Reserve has complicated the economic outlook despite downshifting this month after four successive jumbo hikes of 75 basis points, saying it was not done with policy tightening. The Bank of England and the European Central Bank also tightened this month, stoking recession concerns.
Markets in Asia-Pacific were mixed. The Nikkei 225 in Japan fell 2.5 per cent while the benchmarks in Australia and South Korea declined by 1.5 and 0.8 per cent respectively.