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Hong Kong stocks tumble, tech index hits 13-month low as traders brace for more reports signalling weak China outlook
- Reports this week are likely to show deflation deepened last month in China, while growth in imports and exports cooled
- Local stocks logged their worst start to a year since 2005, defying some bullish calls soon after the market stabilised last month
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Hong Kong stocks tumbled, compounding the local market’s worst start to a year since 2005, while Chinese tech stocks hit a 13-month low as traders braced for more reports signalling a slowdown in the Chinese economy.
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The Hang Seng Index fell 1.9 per cent to 16,224.45 at the close on Monday. The benchmark tumbled 3 per cent last week, the weakest since a 4.6 per cent loss in the opening week of trading 19 years ago. The Tech Index tumbled 3 per cent to hit the lowest level since late November 2022, while the Shanghai Composite Index slipped 1.4 per cent to the lowest since October 2022.
Alibaba Group fell 1.8 per cent to HK$70.35 and e-commerce peer JD.com slipped 3.9 per cent to HK$101.20. Tencent lost 1.4 per cent to HK$288, while online-gaming peer NetEase retreated 3.6 per cent to HK$140.80. EV maker BYD slipped 1.6 per cent to HK$204.80 and rival Li Auto dropped 2.4 per cent to HK$131.60 and Meituan weakened 4.9 per cent to HK$73.95.
China’s economy continued to struggle through the end of last year as deflation persisted. Consumer prices probably fell 0.4 per cent in December from a year earlier, after a 0.5 per cent drop in November, according to forecasts before an official report on January 12. Other economic reports on the same day may show both imports and exports growth slowed, according to Goldman Sachs.
“The significant pullback in the first week of the year has dented sentiment,” Kevin Liu, a strategist at CICC Research, said in a report on Sunday. “Further policy support is still the key to reversing the current situation on the Hong Kong stock market. Even if the Federal Reserve cuts interest rates, any rebound is likely to be short-lived.”
The Federal Reserve will hold its first policy meeting of the year on January 30 and 31. Policymakers raised borrowing costs 11 times totalling 525 basis points since the March 2022 lift-off. Fed fund futures indicated a 95 per cent chance policymakers will keep the key rate unchanged this month, according to data compiled by CME Group.
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