Tech sell-off sends Hong Kong stocks to worst week since February after handover anniversary

Name: A subdued July 1 handover anniversary as heavy police presence seen on the streets
Uploaded: 2021-07-02T02:57:53.000Z
Duration: 3 min 50 s
Description: A subdued July 1 handover anniversary as heavy police presence seen on the streets

Hang Seng Tech Index slumped 3.2 per cent, the biggest setback in nearly four months, as the ATM trio tumbled by 1.6 to 5.1 per cent

The IMF says the US may dial back bond purchases by mid-2022 and raise rates by early 2023, sooner than the Fed’s lift-off projection

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A pedestrian looks at the electronic screen displaying stock prices and the Hang Seng Index in Mong Kok, Hong Kong. Photo: Winson Wong

Zhang Shidongin Shanghai

Published: 10:57am, 2 Jul 2021Updated: 4:59pm, 2 Jul 2021

Hong Kong stocks fell, sending the benchmark index to its biggest weekly loss in four months, after tech firms sold off as Asia’s second-largest equity market returned from a holiday break. Concerns about Covid-19 and higher interest rates re-emerged as the IMF commented on the US policy outlook.

The Hang Seng Index slumped 1.8 per cent to 28,310.42 at the close, following a holiday on Thursday to mark the city’s 24th handover anniversary. The gauge plunged 3.3 per cent for the week, the worst since the five-day ended February 26. The Hang Seng Tech Index tumbled 3.2 per cent, the most since March 8.

Alibaba Group Holding, the owner of this newspaper, slid 3.6 per cent to HK$212, while Tencent Holdings lost 1.6 per cent to HK$574.50 and Meituan crashed 5.1 per cent to HK$304. Xinyi Solar tumbled 8.1 per cent to HK$15.40 and BYD lost 4.7 per cent to HK$221.20, mirroring a sell-off in new-energy stocks and electric-vehicle makers in mainland markets.

The Shanghai Composite Index slid 2 per cent, as sell-offs deepened after the celebrations marking the ruling Communist Party’s centenary. The ChiNext gauge of small-cap tech start-ups tumbled 3.5 per cent, extending a retreat from a six-year high this week as investors fretted about stretched valuations.

“The emergence of the new virus strain will make the pandemic the biggest ‘grey rhino’ for the economic recovery and liquidity expectations in the second half,” said Chen Long, an analyst at Zhongtai Securities. “The market will swoon because of these two factors.”

Stocks have pulled back amid concerns about China’s economic slowdown after data on manufacturing and services industries in recent weeks, while a flare-up in Covid-19 cases involving the more contagious Delta variant also dashed the hopes for further reopening of borders.

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A subdued July 1 handover anniversary as heavy police presence seen on the streets

Issues surrounding the Federal Reserve’s bond tapering and interest rate lift-off also weighed sentiment. The International Monetary Fund said that the Fed is likely to start dialling back asset purchases in the first half of 2022, and probably needs to raise borrowing costs later that year or in early 2023. That is sooner than the late-2023 lift-off projected by the US central bank last month.

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