Hong Kong stocks suffer another sell-off as Alibaba drags Chinese tech lower while Omicron, Evergrande stoke risk aversion

Hong Kong stocks fell to more than 14-month low as Alibaba Group Holding slumped amid a management reshuffle. The spread of Omicron variant and concerns about growing debt default risk among Chinese developers also shook market confidence.

The Hang Seng Index retreated 1.3 per cent to 23,466.39 at the local noon break, the lowest level since September last year. The Tech Index sank 2.7 per cent, while China’s Shanghai Composite Index gained 0.3 per cent.

Alibaba lost 5.4 per cent to trade near at an all-time low to HK$113. The e-commerce group, the owner of this newspaper, said Xu Hong will replace Maggie Wu Wei as chief financial officer from April next year, according to an exchange filing. The stock has lost 28 per cent since November 18 when it reported a weak quarterly earnings, and 47 per cent over the past six months.

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“Risks are everywhere as we get close to the end of the year,” Natixis analysts Emilie Tetard and Florent Pochon wrote in a December 3 report to clients. “The Covid-19 resurgence will make things uncertain again and US-China tensions are increasing on the regulatory front with the US delisting of Chinese tech giants.”

Other Chinese tech giants also saw big losses as Didi Global’s decision to delist from New York continued to hurt sentiment and cause uncertainty. NetEase declined 5 per cent while Tencent Holdings tumbled 2.7 per cent and JD.com sank 3.3 per cent.

China’s securities watchdog tried to calm markets after the Didi Global’s move. It said on Sunday that media reports suggesting Chinese regulators are pushing for so-called variable interest entities to cancel their US listings are a “complete misreading and misinterpretation” of the regulations.

Losses over the past two weeks have driven the price-to-book value of Hang Seng Index members below one time for six straight days through Friday, the longest stretch in 2021. The cheapening valuation, however, has brought no joy for mainland Chinese money managers that invest via the Stock Connect link, with nine of 39 funds in the red.

Elsewhere, Hong Kong confirmed its fourth Omicron case over the weekend as the Covid-19 variant spread across the region, prompting several countries to tighten border controls to contain the pandemic.

China Evergrande stoked risk aversion yet again as the Guangdong provincial government stepped in to oversee its debt restructuring efforts. The move came as China Aoyuan and repeat offender Sunshine 100 missed another bond repayment.

Evergrande, carrying more than US$300 billion of liabilities, plunged 9.8 per cent to an 11-year low of HK$2.03. It failed to meet demands on a US$260 million guarantee, prompting financial regulators to try to calm nerves in the market.

Major markets in Asia retreated. Equities in Japan and Australia sank 0.4 per cent and 0.1 per cent respectively, while stocks in South Korea remain little changed.

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