Hong Kong stocks retreat most in three weeks as Alibaba, HSBC tumble, BTS jumps in Seoul debut

Forty-eight of 50 Hang Seng Index members dropped amid report on US proposal to blacklist Alibaba’s affiliate Ant Group
In China, Yihai Kerry Arawana and Shanghai Holystar Information Technology rallied on their debut; Big Hit Entertainment, the agency managing BTS band, surged in Seoul debut

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 11:01am, 15 Oct, 2020

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Hong Kong stocks fell by the most in more than three weeks, with Alibaba Group Holding and banks leading decliners, as investors assessed China’s newest economic data and the impact of possible US sanctions on the city’s businesses.

The Hang Seng Index slid 2.1 per cent to 24,158.54 at the close on Thursday, the steepest decline since September 21. The Shanghai Composite Index dropped for a second day, losing 0.2 per cent to 3,332.18.

Prices at factory gates declined 2.1 per cent in September, widening from 2 per cent a month earlier, China’s statistics bureau said on Thursday morning. That suggests local manufacturers are struggling to regain pricing power, even as the economy begins to recover after the coronavirus pandemic. Data on industrial inflation tempered the better-than-expected credit growth numbers released by the central bank and a stronger external trade numbers earlier this week.

The bureau is also expected to release the data on third-quarter economic growth on Monday. China’s growth probably accelerated to 5.4 per cent over the past three months from 3.2 per cent for the previous quarter, according to Bloomberg data.

Markets across the Asia-Pacific region also retreated after US stocks slipped in overnight trading amid disappointing earnings reports from Wells Fargo and Bank of America. Meanwhile, Treasury Secretary Steven Mnuchin downplayed the chances of striking a stimulus deal before the November 3 presidential election.

“The market seems to have got a little ahead of itself in pricing in a pro fiscal, political landscape [after the presidential election],” said Stephen Innes, a strategist for global markets at Axi. “Asian markets could suffer the hangover effect from the US market.”

Alibaba, the owner of this newspaper, sank 4.3 per cent to HK$284.80 for the steepest loss since July 14. It was the worst performer among the Hang Seng Index members. Only two of the 50 members avoided losses on Thursday.

Tencent Holdings dropped 3.8 per cent from a record high to HK$552.

Ant Group’s building in Shanghai as captured by a drone. The Alipay operator may be added to the US Entity List, according to a Reuters report on October 12. Photo: EPA-EFE

Sentiment on the e-commerce group weakened following a Reuters report that its affiliate Ant Group may be added to a trade blacklist by the Trump administration. The US State Department submitted a proposal to add the mobile-payment operator to its Entity List, Reuters added, citing people it did not identify.

Lenders slipped on concern they will face sanctions by the US. HSBC declined 2 per cent to HK$29.90 while its subsidiary Hang Seng Bank slumped 2.3 per cent to HK$113.80. Standard Chartered shed 2.1 per cent to HK$35.65.

Trump’s report on Hong Kong autonomy puts HSBC, lenders back into sanctions spotlight

Financial institutions doing business with those deemed responsible for undermining Hong Kong’s autonomy may face sanctions, the US government said on Wednesday, following a State Department report to Congress relating to the Hong Kong Autonomy Act.

On the mainland’s exchanges, Yihai Kerry Arawana Holdings, which produce kitchen food from oil to rice, surged 118 per cent from its initial public offering price to 56 yuan on the first day of trading in Shenzhen. Another debutant Shanghai Holystar Information Technology, a maker of power distribution equipment, gained 23 per cent to 108.50 yuan in Shanghai.

In Seoul, Big Hit Entertainment soared by as much as 160 per cent on its market debut, valuing the agency managing K-pop superstars BTS north of US$10 billion. The broader market was downbeat, however, with the Kospi Index slumping 0.8 per cent.

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