Hong Kong stocks sink by most since May as sell-off hurts mainland funds’ top picks Tencent, Meituan and HKEX

Investors sold down some of the market’s best winners in January after a rally not seen since the starting month of 1985

The relative strength on Hang Seng Index signals stocks are technically overbought and due for a correction

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Stocks in Hong Kong and mainland China slump after a rally in January lifted their benchmark indices to multi-year high. Photo: Shutterstock

Published: 10:35am, 26 Jan 2021Updated: 5:03pm, 26 Jan 2021

Hong Kong’s world-beating stock market rally cooled, with the benchmark index tumbling by the most in eight months. Red-hot performers including Tencent Holdings to Hong Kong Exchanges & Clearing (HKEX) sank on concerns that this month’s rally is excessive, wiping out US$189 billion in market value.

The Hang Seng Index sank 2.6 per cent to 29,391.26 at the close on Tuesday, the biggest slide since a 5.6 per cent sell-off on May 22. The gauge retreated just a day after closing above 30,000 for the first time since May 2019. Some 37 of 52 index members traded lower.

China’s Shanghai Composite Index also fell, shedding 1.5 per cent from a December 2015 high, after the central bank unexpectedly drained liquidity from the financial system amid caution about stock bubbles.

WeChat operator Tencent slumped 6.3 per cent from a record high to HK$718.50. The stock surged 11 per cent on Monday in the biggest one-day spike since October 2011, lifting its market to US$949 billion and to within 5.5 per cent of breaking into the five-member exclusive club of US$1 trillion companies.

HKEX, which is seen as a beneficiary of rising trading volumes, plunged 7.2 per cent to HK$513. Meituan slid 5.3 per cent to HK$378.60 from an all-time high and WuXi Biologics lost 4.5 per cent to HK$115.50.

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