Hong Kong stocks slip as China’s central bank dents rate-cut bets, Baidu sinks on AI chatbot and military controversy

The Hang Seng Index slipped again as the People’s Bank of China kept its policy lending rates unchanged for a fifth month

Some Taiwanese firms weakened in local matket trading after the Democratic Progressive Party retained power without a parliamentary majority

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Stock prices seen outside the Exchange Square in Central, Hong Kong on January 8, 2023. Photo: Li Jiaxing

Published: 10:58am, 15 Jan 2024Updated: 4:24pm, 15 Jan 2024

Hong Kong stocks dropped, adding to two weeks of losses, after China’s central bank kept a key policy lending rate unchanged for a fifth straight month, killing bets among some economists on policy easing to shore up the economy.

The Hang Seng Index fell 0.2 per cent to 16,216.33 on Monday, after sliding 1.8 per cent last week. The Tech Index slumped 1.9 per cent, while the Shanghai Composite Index erased losses to add 0.2 per cent.

Baidu sank 12 per cent to HK$100.50 after the Post reported that scientists at Chinese military labs were testing an artificial intelligence system based on the company’s large-language model ErnieBot. Alibaba Group dropped 0.8 per cent to HK$70 and e-commerce peer JD.com slipped 1.7 per cent to HK$96.65. Chinese EV make Li Auto tumbled 4.3 per cent to HK$120.70.

The People’s Bank of China maintained its one-year policy rate on medium-term lending facilities at 2.5 per cent on Monday, dashing market hopes of a cut similar to the surprise move in August. The central bank, however, injected 216 billion yuan (US$30.2 billion) into the system via the facility.

“The market lacks the kind of catalysts that can significantly drive up stocks,” said Fang Yi, analyst at Guotai Junan Securities in Shanghai. “The consolidation pattern will probably last longer than expected.”