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Hong Kong stock market
BusinessBanking & Finance

Tencent, JD.com, Baidu lead tech stock rout in Hong Kong as central banks tighten policy, China outlook dims

  • Central banks in the UK, Europe, Australia and Turkey tightened this month to tame inflation while the Fed kept to its hawkish message
  • Hedge funds pulled the most money from China this year in favour of assets in Japan, according to Goldman Sachs

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People walking past an electronic screen showing various stock market indicators in Central, Hong Kong in February 2023. Photo: Li Jiaxing
Yulu Ao
Chinese tech stocks slumped in Hong Kong, sending the city’s market to its biggest weekly loss in three months, after more central banks raised interest rates. Waning confidence in China’s economic outlook also sapped appetite for riskier assets.
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The Hang Seng Index tumbled 1.7 per cent to 18,889.97 at the close of Friday trading, brining the retreat this week to 5.8 per ent. The Tech Index sank 2 per cent for the day and 8.5 per cent for the week. Both declines were the worst since mid-March. Markets in mainland China were closed for a public holiday.

Tencent fell 1 per cent to HK$337, while Alibaba Group weakened 0.8 per cent to HK$84.05. Baidu slipped 1.5 per cent to HK$138.20, Meituan dropped 2.3 per cent to HK$124.70 and JD.com declined 1.8 per cent to HK$140.10. Sun Hung Kai Properties fell 2.5 per cent to HK$97.65, and peer CK Asset lost 2.2 per cent to HK$42.95.

“The markets are worried that inflation and rate hikes will increase the pressure on the global economy,” said Kenny Ng, an equity strategist at Everbright Securities in Hong Kong. “Meanwhile, market players do not expect more China stimulus” after recent cuts in policy lending rates, he added.

The Bank of England tightened its policy on Thursday, following similar moves by Australia and the European Central Bank this month. Federal Reserve chair Jerome Powell stayed with the hawkish message that the US may need to tighten further later this year, despite pausing at this month’s policy meeting. Turkey’s central bank hiked on Friday, a U-turn from a series of cuts last year.

“Recession is foretold as central banks try to bring inflation back down to policy targets,” strategists at BlackRock said in a report this week. “It’s the opposite of past recessions: rate cuts are not on the way to help support risk assets, in our view. That’s why the old playbook of simply ‘buying the dip’ doesn’t apply in this regime.”

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