Omicron, Meituan and Macau gambling crackdown offer new threats to Hong Kong stock optimists

The Hang Seng Index has lost almost 17 per cent since the Delta variant emerged in the city in late June. The newest Omicron variant could wreak another havoc

Tech earnings and a crackdown in Macau gambling hub are other ongoing concerns hurting stock market sentiment

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A man heads for the BioNtech vaccination centreat Hiu Kwong Street Sports Centre in Kwun Tong, Hong Kong on November 25. Photo: May Tse

Published: 7:30am, 29 Nov 2021

Like their global peers, Hong Kong’s stock investors are facing a new headwind in Omicron, a new Covid-19 strain that global health officials designated as a “variant of concern.”

Markets sold off globally as the more infectious variant triggered travel bans and lockdown restrictions in Europe and elsewhere, while two travellers were tested positive in Hong Kong last week. The Hang Seng Index slumped 2.7 per cent on Friday, the most in two months. It lost 3.9 per cent for the week, the most since mid-September.

The variant, first detected in southern Africa, has further dimmed the outlook for Asia’s third-largest stock market, adding to concerns about tech earnings and Macau casino crackdown. It has cast doubt on possible border reopening with mainland China next month, a key initiative to revive the city’s broken tourism industry.

“Assuming the worst is probably the safe option for now,” Jeffrey Halley, an analyst at Oanda Corp, an online multi-asset brokerage. “With the delta wave in mind from earlier this year, investors are likely to shoot first and ask questions later until more is known about [Omicron].”

Travel and leisure-related stocks were first to suffer. Casino operators Sands China and Galaxy Entertainment sank more than 6 per cent. Shanghai International Airport, the operator of the Pudong airfield that handles most of the city’s flights, tumbled 4 per cent.