HSBC, XPeng drag Hang Seng to 2-year low on lockdown, weak car sales while Ukraine war stokes inflation concerns
- HSBC, Sun Hung Kai Properties led index losers as Hong Kong lockdown looms; XPeng and EV makers weakened on poor sales
- A surge in oil prices could reignite global inflation, choking economic recovery; Rusal sank 26 per cent amid sanctions on Russian entities
The Hang Seng Index slumped 1.8 per cent to 22,343.92 at the close of Wednesday trading. The Tech Index sank 2.7 per cent, while the Shanghai Composite Index dropped 0.1 per cent.
The Ukraine war fanned commodity prices, with crude oil futures topping US$100 a barrel the first time since 2014, They reached US$110.46 in Asian trading on Wednesday. Gold advanced 2.3 per cent to a one-year high of US$1,943.80 an ounce. Russia said it was “too early to assess” the results of Monday’s peace talks.
“Given that Russia and Ukraine have big sways in oil, natural gas and grain industries, the war will for sure stoke global inflation,” said Zhou Jianhua, an analyst at Central Securities in Shanghai. “That will have a profound impact on the global economy.”
Aluminium producer Rusal tanked 26 per cent as Western sanctions on Russian entities and individuals widened. The stock has lost 52 per cent of its market value since Ukraine invasion.
Commodities are rallying at a time when the inflation is accelerating at multi-decade high in the US and UK, inducing more hawkish stance from central banks. Federal Reserve Chair Jerome Powell is due to deliver a speech to lawmakers later Wednesday on its rate-hike path.
Oil explorers CNOOC jumped 3.4 per cent and PetroChina rose 2.9 per cent as the International Energy Agency said Ukraine conflict could threaten global supply.
Elsewhere, Tencent dropped 1.8 per cent, giving back some of its rally this week. The WeChat operator jumped 2.3 per cent on Tuesday on reports a Chinese business tycoon spent US$5 million on its New York-traded shares.