Hong Kong stocks suffer weekly loss as Shanghai lockdown pressures earnings while Goldman sees disruption to economy

Name: China deploys People’s Liberation Army in Shanghai to aid Covid-19 crisis
Uploaded: 2022-04-08T02:29:48.000Z
Duration: 2 min 4 s
Description: China deploys People’s Liberation Army in Shanghai to aid Covid-19 crisis

Hang Seng falls to a one-week low as the spectre of extended lockdown in Shanghai unnerves market with hit to earnings, economy

In late March, mainland cities with mid- and high-risk districts accounted for one-third of China’s GDP, according to Goldman

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Deserted roads during a lockdown due to Covid-19 outbreak in Shanghai, on April 7, 2022. Photo: Bloomberg

Cheryl Heng

Published: 10:29am, 8 Apr 2022Updated: 11:41pm, 11 Apr 2022

Hong Kong stocks fell as surging Covid-19 cases in Shanghai heightened concerns about further lockdown in China’s main commercial hub, clouding the outlook for corporate earnings amid a slowdown. A late rally in property stocks failed to overturn the tide.

The Hang Seng Index weakened 0.8 per cent to 21,872.01 from last Friday. The Tech Index retreated 2.2 per cent for the week, while the Shanghai Composite Index declined 0.1 per cent.

Alibaba Group Holding led losses among Chinese Big Tech, falling 1.3 per cent to HK$103.80 in Friday trading. Its five-day decline amounted to 2.5 per cent. JD.com lost 1.5 per cent to HK$222.40 from a week ago. Analysts trimmed their price targets for both companies over the past two months on earnings challenges, Bloomberg data showed.

Shanghai remains in lockdown with 21,222 new infections over the past 24 hours, rewriting the daily record for the seventh day. An extended lockdown could hurt production at some of the biggest companies with facilities there, including chip makers SMIC and Hua Hong Semiconductor and car maker SAIC Motor.

“More stringent mobility restrictions in Shanghai and the risk of spillover measures in other cities pose downside risks to first-half GDP growth, especially if lockdowns extend well beyond April,” said UBS’ chief investment office in a note published on Thursday.

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China deploys People’s Liberation Army in Shanghai to aid Covid-19 crisis

A late rally in property developers on Friday cushioned the blow. Country Garden jumped 3.4 per cent to HK$6.63 while China Overseas Land rose 3.7 per cent to HK$26.75. JPMorgan analysts said most of the negatives in the industry have materialised, Bloomberg reported.