Hong Kong stocks revisit 11-month low on China growth concern as Li Ning leads sportswear stocks lower on falling sales

Hong Kong stocks resume declines, sending the benchmark index near an 11-month low on concern Beijing is not doing enough to boost growth
Sportswear maker Li Ning tumbles by record 21 per cent on decline in same-store-sales, stoking concerns about strength of consumption

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:39am, 26 Oct 2023

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Hong Kong stocks resumed a decline, sending the benchmark close to an 11-month low on concern that China will need to do more to shore up economic growth amid rising US funding costs that threaten to dim the global growth outlook.

The Hang Seng Index fell 0.2 per cent to 17,044.61 at the close, near the lowest level since November 10. The Hang Seng Tech Index added 0.3 per cent and the Shanghai Composite Index gained 0.5 per cent.

Sportswear maker Li Ning tumbled by a record 21 per cent to HK$23.95 after same-store-sales fell in the third quarter from a year earlier. Peer Anta Sports Products declined 5.3 per cent to HK$85.95. MTR, which operates Hong Kong’s subway system, slipped 4.4 per cent to HK$28.50 after Morgan Stanley slashed the price target for the stock by 22 per cent, citing rising costs and a slow recovery. Standard Chartered slumped 11 per cent to HK$59.75 after posting an unexpected loss of US$35 million in the third quarter.

“Some of parts of China’s economy are still undergoing a weak recovery,” said Dong Zhongyun, an analyst at Avic Securities in Beijing. “The market is not entirely convinced about whether there will be a relay of the package of growth-stabilising measures that have been rolled out so far.”

China’s approval of 1 trillion yuan (US$137 billion) of government bond sales for disaster relief and the sovereign wealth fund’s purchase of exchange-traded funds this week have failed to impress investors. They are more focused on sell-offs on US Treasuries that have pushed yields to the highest since 2007 and the prospect of more dramatic stimulus measures from Beijing. The Hang Seng Index has dropped 14 per cent this year, making it the worst performer among the world’s major benchmarks.

The debt issuance only represents a small shift of the fiscal policy and is not the “bazooka” stimulus expected by the market, said Aninda Mitra, a strategist at BNY Mellon Investment Management.

Limiting the loss, Alibaba Group rose 0.6 per cent to HK$79.75 as the e-commerce platform kicked off presales for its annual Singles’ Day shopping event. Peer JD.com gained 1.5 per cent to HK$98.10.

Geopolitical developments are also in focus. President Joe Biden and Chinese foreign minister Wang Yi are set to meet in the White House on Friday. This is expected to pave the way for a meeting between Biden and his counterpart Xi Jinping next month.

Other major Asian markets traded lower. Japan’s Nikkei 225 slipped 2.1 per cent, while South Korea’s Kospi retreated 2.7 per cent and Australia’s S&P/ASX 200 lost 0.6 per cent.

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