Hong Kong stocks drop as Alibaba, Evergrande retreat after China signals no imminent stimulus to spur short-term growth

Hang Seng Index fell from near a six-week high amid China slowdown concerns while China disappointed traders banking on policy easing

Alibaba weakened 0.9 per cent, halting a big rally this month and Evergrande tumbled on another failure to sell assets to raise cash

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A man looks at an electronic board showing the stock index and prices at a securities brokerage in Beijing. China says it won’t stimulate the property market to shore up economic growth. Photo: EPA-EFE

Published: 11:04am, 21 Oct 2021Updated: 5:07pm, 21 Oct 2021

Hong Kong stocks retreated from near a six-week high amid concerns about a slowdown in the Chinese economy and worsening liquidity crunch in the domestic property sector. China signaled no intention to spur short-term growth.

The Hang Seng Index fell 0.5 per cent at 26,017.53 on Thursday. The benchmark tech index slipped 0.8 per cent from a five-week high as traders deemed this week’s rally as excessive. Gain in the Shanghai Composite Index narrowed to 0.2 per cent at 3,594.78.

Alibaba, the owner of this newspaper, fell 0.9 per cent to HK$174.30. The stock had surged almost 24 per cent this month through Wednesday on speculation its ties with regulatory authorities were improving. Co-founder Jack Ma made his first overseas trip since authorities foiled his Ant Group’s stock listing plans.

“The worst time for both the Hang Seng and the Tech index had already passed,” said Kenny Tang Sing-hing, chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators. “But people are still unsure whether there will be more regulations in future.”

China Evergrande slumped 11.6 per cent to HK$2.61 as the stock resumed trading after a three-week halt, while Evergrande Property Services Group lost 9 per cent. The developer terminated a US$2.6 billion deal to sell a 50.1 per cent stake in its property services unit following a disagreement on deal terms. The proposed buyer, Hopson Development, jumped 13.6 per cent to HK$28.10.

Other developers fared better as statements by top Chinese officials helped calm jitters amid an industry slump and heightened concerns about bond defaults. The central bank Governor has said the Evergrande risk is controllable and vice-premier Liu He added that reasonable funding needs are being met.