Hong Kong stocks recover from lows struck on policy support despair

The Hang Seng Index is down almost a tenth from this year’s high set last month, as investors took profits amid lack of significant policy support

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:39am, 24 Jun 2024

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Hong Kong stocks finished almost unchanged after briefly dropping to their lowest levels in almost two months, as the lack of fresh supportive measures and lacklustre economic data sparked investor jitters.

The Hang Seng Index slipped ended almost unchanged after falling as much as 1.3 per cent. The Hang Seng Tech Index sank 0.7 per cent and the Shanghai Composite Index retreated 1.2 per cent, set to close below the 3,000-point mark for a second straight day.

Hotpot chain restaurant operator Haidilao International Holding was a prominent decliner after its decision to replace its chief executive officer triggered leadership uncertainties. Tempering losses, Li Auto and BYD rebounded after China and the European Union agreed to start talks on the plan to impose tariffs on Chinese electric vehicles.

In the latest negative sign for the world’s second largest economy, foreign direct investment in China dropped 28.2 per cent in the January-to-May period from a year ago, worsening from a 27.9 per cent decline in the previous four months, according to the official data released on Friday night.

“There’s no catalyst now and valuations are fair,” said Wang Xueheng, an analyst at Guosen Securities. “We recommend investors not take any action for now. If the index falls around the 17,200 level, investors can consider some opportunity of bottom-fishing.”

The Hang Seng Index is now down more 8 per cent from 2024’s peak struck last month, as investors took profits with economic fundamentals lagging. The May economic data set showed China’s economic recovery was patchy, while a high-profile financial gathering attended by top officials from the central bank and the stock-market regulator unveiled only piecemeal measures of support.

Investors should stick with buying stocks that promise hefty dividends, as a policy push is likely to encourage more payouts and buy-backs, and the cash built up by listed companies is at an all-time high, according to Goldman Sachs.

Haidilao slumped 2.8 per cent to HK$14.60 after it named Gou Yiqun as the CEO to replace Yang Lijuan, who resigned to take on a new post in a unit of the company. Among other prominent decliners, Semiconductor Manufacturing International Corp retreated 3.4 per cent to HK$17.98 and online travel agency Trip.com Group lost 2 per cent to HK$377.60.

On the flip side, Li Auto rose 1.6 per cent to HK$70.25 and peer BYD added 0.6 per cent to HK$217.60, after China’s state-controlled Global Times reported, Beijing wants the EU to scrap its preliminary tariffs on Chinese electric vehicles by July 4.

Liquor giant Kweichow Moutai slumped by as much as almost 4 per cent on a report by the National Business Daily report said that the price of its flagship liquor dipped by about 100 yuan in a single day close to 2,100 yuan (US$289) per bottle over the weekend. The stock dropped by as much as 3.9 per cent but recovered to trade marginally higher at 1,476.55 yuan.

Midea Real Estate Holding surged 70 per cent to HK$6.37 on a proposal to take the property development arm of the company private.

Other major Asian markets were mostly weak. South Korea’s Kospi retreated 0.7 per cent and Australia’s S&P/ASX 200 lost 0.8 per cent, while Japan’s Nikkei 225 rose 0.5 per cent.