Hong Kong stocks slide to 5-week low on lockdown costs, while CNOOC, PetroChina slip amid oil retreat

Name: How Covid shut down Shanghai
Uploaded: 2022-04-20T02:43:22.000Z
Duration: 5 min 59 s
Description: How Covid shut down Shanghai

The IMF downgraded China’s growth forecast to 4.4 per cent from 4.8 per cent, citing pain from Covid-19 measures

Oil sank 5 per cent on Tuesday, the most in two weeks, amid concerns about global economic outlook

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A man walks past a sign showing the Hang Seng Index ion April 11. Photo: AFP

Cheryl Heng

Published: 10:43am, 20 Apr 2022Updated: 4:49pm, 20 Apr 2022

Hong Kong stocks failed to sustain a rebound from a five-week low as concerns about China’s growth outlook after the International Monetary Fund trimmed its forecast for the Asian economy. Oil producers tumbled after crude retreated.

The Hang Seng Index dropped for a second day, losing 0.4 per cent to 20,944.67 at the close of Wednesday trading. Trading swung between gains and losses, before closing at the lowest since March 16. The Tech Index slipped 0.5 per cent while the Shanghai Composite Index fell 1.4 per cent.

Alibaba Group, Tencent Holdings and Meituan fell by 0.6 to 0.9 per cent as Shanghai counts losses from three weeks of lockdown. Xinyi Solar plunged 7.6 per cent to HK$12.60 while Country Garden Services tanked 11 per cent to HK$32.65 after Morgan Stanley cut its price target on Tuesday.

China’s economy could suffer from its efforts to stamp out Covid-19 outbreaks, the IMF said on Tuesday, after cutting its GDP estimate to 4.4 per cent from 4.8 per cent. That compares with the official target of about 5.5 per cent. Banks including Standard Chartered and Goldman Sachs had earlier trimmed their GDP forecasts.

“[Investors still] remain a bit cautious, given the mainland’s economic growth and pandemic developments,” said Stanley Chan, research director at Emperor Capital in Hong Kong. “Markets still need a further boost” from policymakers, he added.

If China continues its zero-Covid policy, it could lead to a contraction in its second quarter GDP, said Citibank Global Wealth’s chief investment office in a note on Tuesday. It expects China to deliver a stronger dose of stimulus, which would support asset prices.

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How Covid shut down Shanghai

The IMF downgrade triggered an overnight 5 per cent slide in crude oil futures, sending oil producers lower. CNOOC slipped 4.1 per cent to HK$11.16 while PetroChina declined 2.9 per cent to HK$4.