Hong Kong stocks sink by most in seven weeks as Meituan sell-off, inflation menace unnerved traders

Surging global commodity prices and factory-gate prices in China heightened concerns about policy tightening

Meituan slipped 5.3 per cent, erasing more than 20 per cent or US$42.7 billion in wealth over 10 straight days

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Stocks slide from New York to key Asia-Pacific markets on inflation worries. A deepening sell-of in Meituan also pummelled stocks in Hong Kong. Photo: EPA-EFE

Published: 10:58am, 11 May 2021Updated: 5:32pm, 11 May 2021

Hong Kong stocks suffered the biggest sell-off in seven weeks as a surge in global commodity prices and factory-gate inflation in mainland China stoked concerns about tightening monetary policy. Meituan slumped for a 10th straight day to the lowest since October.

The Hang Seng Index fell for a third day, sinking 2.03 per cent to 28, 013.81 at the close of Tuesday trading. The index has lost 2.2 per cent in three days. The Shanghai Composite Index erased losses to climb 0.4 per cent.

Major markets in Asia all headed south, with Japan’s benchmark falling more than 3 per cent as the worst performer, while the ASX 200 and Kospi lost more than 1 per cent. The Nasdaq 100 Index tumbled 2.6 per cent in overnight trading.

Higher commodity prices rattled markets, with copper and steel hitting record levels while futures contracts on iron ore also touched an all-time high on China’s Dalian Commodity Exchange, prompting a warning from officials. Stocks retreated even as the Federal Reserve pledged to stick with its accommodative policies to keep growth on track.

“Surging commodity prices have led to a debate on inflation and sparked worries about liquidity tightening,” said Xu Fei, an analyst at Wanlian Securities. “The direction of the central bank’s monetary policies needs to be highly on the radar screen.”