Hong Kong stocks slump to 3-week lows on Middle East tensions, mood cautious ahead of China data dump

The Hang Seng Index hit its lowest since March 28 after Iran’s first-ever direct assault on Israeli territory sparked worries about oil prices and its impact on the rate cut view
China economic data due to be released this week includes first quarter GDP, March industrial production, retail sales and employment rate

Hong Kong stock market

Jiaxing Li

Published: 10:37am, 15 Apr 2024

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Hong Kong stocks declined to three week-lows as rising geopolitical tensions dealt a further setback to investor sentiment already rattled by last week’s export data shock. The mood remained defensive ahead of a slew of economic data due to be released on Tuesday.

The Hang Seng Index declined 0.7 per cent to 16,600.46 at the closing of Monday trading, a level not seen since March 28. The Tech Index fell 0.9 per cent, while the Shanghai Composite Index added 1.3 per cent after Beijing issued measures aimed at curbing market volatility.

E-commerce group Alibaba Group slipped 1.7 per cent to HK$70.45, peer JD.com declined 1.2 per cent to HK$101.20, and Tencent retreated 1.6 per cent to HK$304.60. EV maker Li Auto slumped 1.4 per cent to HK$116.40 and Geely Auto lost 2.1 per cent to HK$9.26.

Risk appetite soured after Iran launched its first-ever direct assault on Israeli territory late Saturday in a major escalation of the long-running covert war between the regional foes.

A key set of economic data, including first quarter GDP, industrial production, March retail sales and employment rate will be released on Tuesday, which will provide clues about the recovery trajectory in the world’s second largest economy.

Investors were already nervous after China’s export declined by 7.5 per cent from a year earlier in March, a government report on Friday showed. Those figures missed estimate and were in sharp contrast to the 7.1 per cent growth in combined figures for January and February. New yuan loans were also weaker-than-expected at 3.09 trillion yuan in March, a historical low.

“A sustained rebound in growth momentum is still in doubt” and the recovery is likely to stay bumpy this year, economists at Barclays said in a note over the weekend.

The Hang Seng Index has declined 3.1 per cent since hitting a four month-high last week, as investors dumped shares after data showed persistent deflation pressures and shrinking exports. The retreat has erased the index’s year-to-date gains, taking it into the red 2024.

Zhejiang Hongxin Technology, a vehicle wheels manufacturer, surged 238 per cent from its IPO price to 35.98 yuan per share on its trading debut in Shenzhen.

Other key Asian markets retreated across the board following the Middle East tensions. Japan’s Nikkei 225 lost 0.3 per cent, South Korea’s Kospi Index tumbled 0.4 per cent, while Australia’s S&P/ASX 200 declined 0.5 per cent.