Hong Kong stocks sink to lowest since 2011 as rate increases shake market confidence, heighten recession worries

The Hang Seng Index slipped to the lowest level since December 2011 as Alibaba, Tencent led tech losses, while HSBC and Sun Hung Kai tumbled

The HKMA raised its base rate to 3.5 per cent, the highest since the global financial crisis in 2008, in lockstep with the Fed’s 75-basis point tightening

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An investor looks at an electronic board showing stock information at a brokerage in Shanghai. Photo: Reuters

Published: 10:13am, 22 Sep 2022Updated: 4:57pm, 22 Sep 2022

Hong Kong stocks slumped to the lowest level in almost 11 years on concerns more interest-rate increases by global central banks will crush consumption, damage corporate earnings and push the global economy into a recession.

The Hang Seng Index tumbled 1.6 per cent to 18,147.95 at the close of Wednesday trading, a level not seen since December 2011 while key markets in Asia-Pacific declined by 0.6 to 1.6 per cent. The Tech Index lost 1.7 per cent while the Shanghai Composite Index declined 0.3 per cent.

Sixty-two of the 73 Hang Seng index members fell, as did all members of the finance and utilities sub-indices. The Hong Kong stock market had lost US$1.2 trillion of capitalisation this year before Thursday, while the benchmark index suffered more than 21 per cent erosion.

Alibaba Group tumbled 2.6 per cent to HK$80.85, lowest since mid-March, while Tencent Holdings retreated 1 per cent to HK$283, a four-year low. JD.com, Baidu and Lenovo Group lost 2 to 3.1 per cent, and Macau casino operators Sands China and Galaxy both declined by over 2.5 per cent.

The Hong Kong Monetary Authority lifted its base rate by 75 basis points to 3.5 per cent on Thursday, in lockstep with the same increase by the Federal Reserve. That brought the cost of money in the local market to the highest level since the global financial crisis in 2008.

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