Hong Kong, mainland China stocks tumble as oil shock revives recession worries
Shanghai Composite Index falls below 4,000 points for the first time in two months, underscoring investor jitters
The Hang Seng Index tumbled 2 per cent to 25,500.58 at the close. The Hang Seng Tech Index dropped 2.2 per cent.
On the mainland, the Shanghai Composite Index retreated 1.4 per cent, recovering some losses after falling to as low as 3,994.17. The CSI 300 Index slid 1.6 per cent.
Tencent Holdings tumbled 5.8 per cent to HK$518.50 on concerns that its plan to double investment in artificial intelligence this year would erode earnings. Fourth-quarter net income for the social media giant had come in line with analysts’ projections. Alibaba Group Holding fell 4.1 per cent to HK$132 before its earnings release later on Thursday.
With the US-Israel war with Iran extending into its third week, crude oil remained in focus. Both Brent and West Texas Intermediate oil contracts traded around US$100 a barrel after missile strikes expanded to critical energy infrastructure in the Gulf area. The narrative shifted to the damage of oil production, from disruption to supply, on the back of the blockade of the Strait of Hormuz.
“Higher oil prices are already manifesting in rapid increases in pump prices for gasoline and diesel,” said Jon Butcher, an economist at Aberdeen Investments. “They will result in higher prices for food and plane tickets, among other categories, over the next couple of months. But these will also cumulatively lower household disposable income and weigh on consumer spending.”