Hong Kong stocks slide by most in 5 weeks as Alibaba, tech peers sink on China lockdown concerns and Fed tightening path

Name: Shanghai residents confront officials after swift return of lockdown
Uploaded: 2022-06-13T02:43:47.000Z
Duration: 1 min 31 s
Description: Shanghai residents confront officials after swift return of lockdown

The Hang Seng Index suffered the biggest drop since May 6 as a rebound in Covid-19 cases in Hong Kong, mainland China revived lockdown concerns

The Federal Reserve is expected to tighten again this week to cool US inflation at 40-year high, after raising its key rate twice this year in policy lift off

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People walk on pedestrian bridge showing stock exchange data in Lujiazui in Shanghaii on June 8. Photo: EPA-EFE

Cheryl Heng

Published: 10:43am, 13 Jun 2022Updated: 5:03pm, 13 Jun 2022

Hong Kong stocks slumped by the most in five weeks after a rebound in Covid-19 cases in the city and across mainland China revived lockdown fears while concerns about further US monetary tightening also crimped risk appetite.

The Hang Seng Index tumbled 3.4 per cent to 21,067.58 at the close of Monday trading, suffering its worst drop since May 6. The Tech Index sank 4.7 per cent, while the Shanghai Composite Index lost 0.9 per cent.

Alibaba Group Holding, the owner of this newspaper, tumbled 8 per cent to HK$103.80, paring a 22 per cent advance last week. Meituan retreated 6.5 per cent to HK$188.20, while Tencent fell 4.9 per cent to HK$377. Other notable losers included Xinyi Solar and Country Garden, both sliding by more than 6 per cent.

Beijing tightened containment measures just a week after allowing dine-in services, with local authorities warning of an “explosive” Covid-19 outbreak connected to a popular bar. Shanghai separately ordered mass testing in half of the 16 districts to screen for any potential outbreak, while Hong Kong logged more than 800 cases for a second day on Sunday.

“The Chinese economy continues to face downside risks” under the zero-Covid policy, said Harmen Overdijk, chief investment officer at Leo Wealth in Hong Kong. China will likely impose new curbs in response to fresh outbreaks and “this dynamic will remain a drag on economic activity,” he added.

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Shanghai residents confront officials after swift return of lockdown

The risk of lockdowns is crimping appetite for Chinese stocks after a robust rally fanned by the reopening of Shanghai on June 1. Stocks have risen more than US$1 trillion in value in mainland and Hong Kong markets since the mid-March sell-off, as investors bet the worst has passed.