Hong Kong stocks tumble as yuan outlook stokes fund outflows while Evergrande, Country Garden slide on more bad news
- Foreign funds sold US$2.1 billion of Chinese stocks last week, while foreign exchange outflows reached US$42 billion in August, the most since 2016
- Evergrande slumped as much as 25 per cent after authorities detained some executives from its wealth management unit
The Hang Seng Index fell 1.4 per cent to 17,930.55 at the close of Monday trading to a three-week low. The Tech Index declined 2.2 per cent while the Shanghai Composite Index gained 0.3 per cent.
Alibaba Group weakened 2.4 per cent to HK$84.20, e-commerce rival JD.com dropped 2.9 per cent to HK$121, while food delivery platform operator Meituan slipped 1.9 per cent to HK$122. Tencent declined 1.6 per cent to HK$312.20.
The Hang Seng Index has retreated about 2 per cent this month as investors ignored recovery signs and rued Beijing’s go-slow approach to revitalise the economy. Foreign funds sold US$2.1 billion of Chinese stocks last week, taking the six-week outflows to a record US$15 billion, Goldman Sachs said.
Foreign-exchange outflows from China amounted to US$42 billion in August versus US$26 billion in July, it added, the highest since 2016.
“The People’s Bank of China still has more to do regarding incentivising the consumer sector and shoring up the troubled property sector,” said Tim Waterer, chief market analyst at KCM Trade. Beijing is still not providing sufficient stimulus to reboot growth, research firm Alpine Macro added.
Other major Asian markets weakened. South Korea’s Kospi lost 1 per cent and Australia’s S&P/ASX 200 dropped 0.7 per cent. Japanese markets are closed for a holiday.