Hong Kong stocks slide as Shimao downgrade, Macau casino regulatory risks trigger sell-off while Alibaba drags tech index

Hong Kong stocks slipped for a third day on renewed concerns about liquidity crisis and debt defaults among Chinese developers. Macau casino operators tumbled while Weibo’s post-IPO slump deepened.

The Hang Seng Index retreated 1.3 per cent to 23,635.95 as of the close of Tuesday trading while the Tech Index lost 2.3 per cent. China’s Shanghai Composite Index ended the day with a 0.5 per cent drop.

Property stocks were among the biggest losers. Country Garden Services sank 10.2 per cent, China Resources Land slid 4.7 per cent and China Overseas Land weakened 3.7 per cent, pushing the Hang Seng Properties Index to the biggest loss in three months. Alibaba Group and Tencent Holdings fell by at least 1.5 per cent.

“Markets are worried that more mainland property developers are having liquidity problems,” said Kenny Tang Sing-Hing, managing partner at money manager Venture Smart Asia. Asset-shuffle involving its services unit “highlights cash flow concerns” within the broader group, he added.

Shimao tumbled 20 per cent to HK$5.67, despite denying media reports about extending its trust-loan repayment plan. Its property services unit crashed 32 per cent. JPMorgan downgraded both stocks to underweight on heightened liquidity concerns after it sold some assets to its unit, according to Bloomberg.

The Hang Seng Properties Index has now lost more than 4.8 per cent since Fitch Ratings declared China Evergrande and Kaisa Group in default on December 9 when they failed to repay offshore bondholders.

Macau casino operators suffered steep losses, with Wynn Macau and MGM China plunging by more than 8.9 per cent. Fitch placed some casino concessionaires on rating watch, citing imminent regulatory risk. Sands China slipped 6.9 per cent, while Galaxy Entertainment declined 3.4 per cent.

The arrest of Alvin Chau, Macau’s casino junket boss, has stoked fears China is cleaning up the industry and this has added to worries surrounding new rules and concession terms for existing gambling operators.

Weibo slumped 9.6 per cent to HK$219.80 after the Cyberspace Administration of China slapped a 3 million yuan (US$471,100) fine on the firm or allowing “forbidden” information on its Twitter-like social-media platform. The stock has lost 19.4 per cent since its December 8 debut.

Goodwill E-Health Info, which develops medical information software, climbed 8 per cent on its market debut in Shanghai. In Hong Kong, logistics firm Hangzhou SF Intra-City Industrial slumped 9.3 per cent.

Major markets in Asia Pacific retreated. South Korean and Japanese equities declined by 0.5 to 0.7 per cent, while the benchmark in Australia was little changed.