Hong Kong stocks revisit 2-year low as Russia sanctions widen while commodities rally, Rusal sinks 17 per cent

Local equities slid in worst month since November, as sanctions on Russia widened; Aluminium producer Rusal sank 17 per cent as the rouble crashed

Risky assets waned as a flight to safety buoys the US dollar and Treasuries while commodities jumped, stoking inflation concerns

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Turmoil in global markets intensifies after Russia invaded Ukraine, triggering sanctions by the US and its allies. Photo: AFP

Published: 10:27am, 28 Feb 2022Updated: 5:01pm, 28 Feb 2022

Stocks in Hong Kong and mainland China slipped as the US and its allies started to sanction Russia over its Ukraine invasion, fanning commodity prices and inflation worries. Rusal sank as the rouble crashed against the dollar.

The Hang Seng Index retreated 0.2 per cent to 22,713.02 at the close of Monday trading, the lowest since the depth of the pandemic in mid-March 2020. The benchmark slumped 6.5 per cent last week. The Tech Index rose 0.1 per cent while the Shanghai Composite Index added 0.3 per cent, both recovering from intraday lows.

Alibaba Group led the retreat among Chinese tech peers, with a 1 per cent loss as analysts continued to trim their price targets after its earnings report last week. Sands China, Geely Auto and Sino Biopharmaceutical all fell by more than 4 per cent, while Hong Kong Exchanges and Clearing tumbled 3.7 per cent.

Companies linked to Russian exports saw their shares sinking. Aluminium producer United Rusal International sank 17 per cent in Hong Kong as the Russian currency crashed more than 30 per cent against the US dollar.

“The sanctions, and the financial turmoil delivered to Russia, will cause a significant impact to global markets in the short term,” analysts at CMB International wrote on Monday. “Energy, agricultural products and safe-haven assets will rally, while stocks will be under pressure.”

Oil surged 3.8 per cent to trade above US$95 per barrel on supply disruption concerns, potentially fomenting an energy crisis and inflation fears. Gold advanced above US$1,900 an ounce, approaching the US$2,063 record set in August 2020.