Hong Kong stocks slump as China’s rate cuts underwhelm market bulls while Alibaba slips on management reshuffle

Name: After long absence from China, Jack Ma makes rare appearance to visit school in Hangzhou
Uploaded: 2023-06-20T02:42:07.000Z
Duration: 2 min 17 s
Description: After long absence from China, Jack Ma makes rare appearance to visit school in Hangzhou

Chinese lenders cut loan prime rates for the first time since August amid deepening struggle in housing market

Alibaba Group slips from a two-month high; Daniel Zhang Yong to step down as chairman and CEO to oversee cloud-computing unit

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A screen displays the stock figures for companies including Tencent and Alibaba outside the Exchange Square in Central, Hong Kong in March 2022,. Photo: Bloomberg

Jiaxing Li

Published: 10:42am, 20 Jun 2023Updated: 4:42pm, 20 Jun 2023

Hong Kong stocks fell by the most in three weeks as China failed to meet expectations for a bigger cut in borrowing costs to revive the housing market. Alibaba Group slipped from a two-month high following a boardroom and management reshuffle.

The Hang Seng Index slumped 1.5 per cent to 19,607.08 at the close of Tuesday trading, the most since May 31. The Tech Index sank 2.5 per cent while the Shanghai Composite Index declined 0.5 per cent.

Alibaba Group tumbled 1.5 per cent to HK$88.35, while e-commerce rival JD.com weakened 3 per cent to HK$149.70 and food delivery platform Meituan declined 3.4 per cent to HK$132.30. Developer Country Garden lost 6.8 per cent to HK$1.65, and peer Longfor slumped 5 per cent to HK$19.44.

Chinese banks on Tuesday cut both the one- and five-year loan prime rates by 10 basis points to 3.55 per cent and 4.2 per cent respectively, the central bank said, noting concerns about the housing market. Economist had expected a bigger cut on the five-year loan rate tied to mortgage financing.

“Markets should curb their expectations for a fast and cure-all [stimulus] package,” Nomura economists including Ting Lu said in a note on Tuesday. There could be more monetary easing following but they will only have a limited impact, they added.

Today’s cut followed last week’s reduction in two policy rates aimed at injecting more liquidity into the financial system. Daiwa said China’s property sector continued to contract in May, with slower average selling price growth and further declines in construction and real estate investment.

02:17

After long absence from China, Jack Ma makes rare appearance to visit school in Hangzhou

Consumer sentiment weakened further this month as income growth slowed and confidence among Chinese homebuyers waned, a Bank of America survey showed. Only 35 per cent of the respondents said they plan to spend more over the next six months, versus 43 per cent in its April survey.