Hong Kong stocks weaken as traders exit overheated market and China reports slower growth while Fosun bucks downtrend
- China’s economy slowed last quarter as a surge in Covid infections in December disrupted activity and authorities removed mobility curbs
- Hang Seng Index has rallied 48 per cent from the recent low on October 31, sending its technical buy-sell indicator into an overbought zone
The Hang Seng Index declined 0.8 per cent to 21,577.64 at the close. The Tech Index lost 0.1 per cent and the Shanghai Composite Index also dropped 0.1 per cent.
E-commerce platform owner JD.com slipped 1.7 per cent to HK$239.60 and search engine operator Baidu lost 1.6 per cent to HK$132.10. Meituan slid 0.5 per cent to HK$164.80. Macau casino operator Sands China tumbled 2.8 per cent to HK$27.95 and WuXi Biologics slumped 6.1 per cent to HK$69.40.
“This deceleration shows the pressure of uncertainties associated with Covid,” said Zhu Chaoping, a strategist at JPMorgan Asset Management in Shanghai. “On the other hand, risks persist in the property sector and local government debt. Accommodative policies should also remain in place to support business confidence.”
Other government reports today showed retail sales fell by 1.8 per cent from a year earlier, following a 5.9 per cent decline in November. Industrial output increased 1.3 per cent versus a 2.2 per cent gain in November.
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Stocks weakened as sentiment turned fragile. Local stocks have rallied 48 per cent from a low on October 31, sending the relative-strength reading on the Hang Seng Index into an overbought zone. That suggests the rally this year that added US$800 billion of capitalisation to the Hong Kong and mainland markets could reverse soon.
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Bucking the trend, Fosun International jumped 2.8 per cent to HK$7.34. The diversified Chinese conglomerate’s domestic onshore unit obtained a 12 billion yuan (US$1.8 billion) syndicated loan from eight Chinese banks, suggesting its liquidity problem has improved.
Two companies started trading in Hong Kong on Tuesday. Sanergy Group jumped 11 per cent to HK$1.78 while property management firm Runhua Living Service Group tumbled 26 per cent to HK$1.26.
Major Asian markets were mixed. Japan’s Nikkei 225 climbed 1.2 per cent, while South Korea’s Kospi retreated 0.9 per cent and Australia’s S&P/ASX 200 lost less than 0.1 per cent.
