Hong Kong stocks fall to 5-week low after bad news on PBOC easing momentum as Xi downplays virus impact on economy

Tech stocks have slumped 7.6 per cent this week in Hong Kong as market struggled for clues on policy easing impetus from Beijing
CNOOC surged in Shanghai debut after a US$4.3 billion offering to trade at 54 per cent premium to its own Hong Kong-listed shares

Hong Kong stock market

Cheryl Heng

Published: 10:53am, 21 Apr 2022

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Hong Kong stocks fell for a third day as traders struggled for policy easing signs from China’s top leadership amid economic losses caused by Covid-19 lockdowns. Prices drifted after the central bank offered a token easing step.

The Hang Seng Index retreated 1.3 per cent to 20,682.22 at the close of Thursday trading, the lowest level since March 16. The Tech Index tumbled 3.5 per cent This week’s losses in the gauges of 3.9 per cent and 7.6 per cent are the most in six weeks. The Shanghai Composite Index declined 2.3 per cent.

Alibaba Group Holding lost 3.1 per cent to HK$87.90 while JD.com fell 6.5 per cent to HK$206.40 and Meituan tumbled 4.9 per cent to HK$137.80. Tencent and NetEase weakened by at least 3 per cent each.

President Xi Jinping delivered a speech via a video link at the annual Boao Forum in southern Hainan province on Thursday. This year’s theme is centred on the Covid-19 pandemic, which has threatened to freeze economic activity in key manufacturing and technology hubs.

Xi emphasised the economy’s resilience, saying China “offers powerful momentum” in pandemic recovery. He downplayed concerns about the economic impact from its hardline virus control measures which has shut factories and caused supply-chain disruptions for carmakers like Li Auto, Xpeng and Tesla.

There are “concerns whether the Chinese government really has the tools or sufficient measures to boost the economy, given the impact of lockdowns,” said Mark Po, head of research at China Galaxy International Securities in Hong Kong.

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Expectations of stronger policy-easing measures have gained traction amid market disappointment, after the central bank offered a token 25-basis point cut in banks’ reserve ratio last week and commercial banks refrained from lowering their lending rates this week.

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In Shanghai, the new daily Covid-19 cases fell to the lowest in 15 days after three weeks of a citywide lockdown. Local authorities are now focusing on preventing spillover beyond the highest-risk areas and hospitals into the community.

Li Auto slumped 4.4 per cent to HK$93.90. The carmaker said it would delay the deliveries due to disruptions caused by pandemic control measures, the company said on its mobile website.

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Local stocks failed to revive even as Hong Kong started easing some of its social-distancing restrictions from Thursday. Hotel quarantines remain and airlines still face potential suspensions for carrying three or more infected passengers, leaving its borders relatively closed.

China’s biggest oil explorer CNOOC surged 28 per cent to 13.79 yuan on the first day of trading in Shanghai following a US$4.3 billion domestic stock offering. That equals to a 54 per cent premium over its Hong Kong-listed shares, versus the market average of 41.5 per cent.

Two other Chinese firms sank on their trading debuts in Shenzhen. Hubei Zhongyi Technology slumped 25 per cent, while Xiamen Jiarong Technology Company slid 9 per cent.

Markets in Asia rose on Thursday. Japanese stocks gained 1.2 per cent while Australian and South Korean shares increased by at least 0.3 per cent.