Stocks in Hong Kong fell as Beijing’s lacklustre policy announcement on Friday disappointed investors amid rising concerns about tariffs following the US election.
The Hang Seng Index slid 2.1 per cent to 20,288.99 at the noon trading break on Monday, while the Tech Index dropped 1.5 per cent. The CSI 300 Index and the Shanghai Composite Index both lost 0.1 per cent.
Property and tech stocks led an overall decline in Hong Kong. Longfor Group plunged 5.7 per cent to HK$12.94, New World Development fell 1.8 per cent to HK$7.82 and Sun Hung Kai Properties lost 2.4 per cent to HK$78.55.
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Alibaba Group dropped 3 per cent to HK$91.20, while Baidu fell 3.3 per cent to HK$86 and JD.com lost 5.7 per cent to HK$149.60.
On Friday, the standing committee of China’s top legislature approved an additional 6 trillion yuan (US$835 billion) bond quota to defuse hidden local debts. The policy announcement has been seen as insufficient to inject life into the nation’s sluggish economy.
“Markets may have been disappointed, as only debt swap programmes were announced,” Ting Lu, the chief China economist at Nomura, said in a note on Monday, adding that failing to mention any upcoming fiscal stimulus could deal a blow to markets.
Donald Trump’s re-election and China’s announcement are likely to disappoint investors in Asia excluding Japan, especially when it comes to Hong Kong and China stocks, at least in the near term, economists at Nomura including Chetan Seth and Ankit Yadav, said in the note.
Tariffs will likely to lead to lower global growth, higher US inflation, possibly fewer Fed rate cuts, a stronger US dollar and higher bond yields amid a general rise in geopolitical and trade tensions, which will negatively impact stock markets in China and the region, they added.
Policymakers may prefer to introduce further stimulus in the 2025 budget, according to economists including Jacqueline Rong and Shan He at BNP Paribas. In the near term there might be some profit-taking pressure, they added.
Other major Asian markets lost ground. Japan’s Nikkei 225 fell 0.2 per cent and South Korea’s Kospi retreated 1.2 per cent, while Australia’s S&P/ASX 200 lost 0.5 per cent.
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