Hong Kong stocks retreat as Goldman predicts bigger slide in property prices

Stocks surrendered some of the 5.9 per cent rally from Wednesday after Goldman Sachs predicted a bigger slide in home prices in the city

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A pedestrian looks at a screen displaying the stock price of Hang Seng Index outside a bank in Mong Kok, Hong Kong. Photo: Winson Wong

Published: 10:29am, 6 Oct 2022Updated: 5:00pm, 6 Oct 2022

Hong Kong stocks fell as traders took advantage of the biggest rally in five months on Wednesday to lock in gains. Some developers weakened after Goldman Sachs forecast a deeper slump in home prices in the city.

The Hang Seng Index slipped 0.4 per cent to 18,012.15 at the close of trading, struggling near the lowest level in 11 years after a 5.9 per cent surge on Wednesday. The Tech Index declined 0.7 per cent. Financial markets in mainland China are shut for the Golden Week holiday.

Alibaba Group declined 1.7 per cent to HK$82.80 while JD.com retreated 3.6 per cent to HK$205.40. Carmakers Geely Auto fell 3.8 per cent to HK$11.06 while BYD slipped 3 per cent to HK$203.60. Developer Longfor fell 2.5 per cent to HK$23.85 while Country Garden slumped 3.6 per cent to HK$1.89.

“A slight drop is normal” after a strong bounce on Wednesday, said Dickie Wong, executive director at Kingston Securities. The market sentiment is still weak and investors are taking a “wait and see” approach before more policy clues from China, he added.

The Hang Seng Index jumped on Wednesday to claw its way out from the lowest level in more than a decade. It was the biggest one-day gain since mid-March, in line with a rally in regional equities as traders bet on a slower US tightening pace in 2023.

Markets remained mixed across the region after reports suggested a strong labour market and services sector in the US, denting hopes for fewer rate increases. Equities in Australia fell, while those in Japan and South Korea advanced.

Stocks in Hong Kong weakened after Goldman Sachs forecast a deeper drop in home prices in the city, saying higher interest rates will sap demand. Most investors have a negative view on Chinese stocks, according to a recent BCA survey, because of the ongoing property market slump and currency depreciation outlook.