Alibaba dents Hong Kong market on stock overhang concerns while China economic data disappoints amid Omicron cases

  • Tech and bank stocks lead losses among Hang Seng Index members while stocks in mainland China reopen with big gains after a five-day trading break
  • Alibaba files in the US to register 1 billion American depositary shares, each representing eight ordinary shares

Hong Kong stocks fell as Alibaba Group Holding led losses in major Chinese technology companies amid concerns about stock overhang. A private report today showed China’s services industry grew at the slowest pace in five months.

The Hang Seng Index slipped 0.3 per cent to 24,498.05, at noon trading break, snapping a two-day post-Lunar New Year rally. The Tech Index tumbled 1.8 per cent.

Alibaba, the owner of this newspaper, slumped 3.7 per cent to HK$116.80, after it filed in the US to register 1 billion new American depositary shares. Each ADS represents eight ordinary shares in the Chinese e-commerce group.

The Shanghai Composite Index jumped 1.9 per cent as stocks in mainland China caught up with gains elsewhere during the five-day trading break. The MSCI China Index rallied 4.7 per cent while the S&P 500 Index gained 1.6 per cent when onshore trading paused from January 31 for Lunar New Year.

“During the Lunar New Year holiday, global risk assets recovered slightly, but volatility remains high” with a hawkish Federal Reserve, said Citic Securities in a note on Monday. “The volatility of the US stock market may continue to affect the global stock market.”

HSBC lost 0.3 per cent, retreating from near a two-year high as Hong Kong struggled to contain Covid-19 cases that surged to almost 700 cases in the past two days, clouding economic recovery prospects.

Property developers also declined, with the Hang Seng Property Index shrinking as much as 0.8 per cent. Property market transactions sank to a 17-month low as the fifth coronavirus outbreak in the city dented business activity.

Elsewhere, the Caixin/Markit services PMI index fell to 51.4 in January from 53.1 in December, the weakest reading since August as a surge in Covid-19 cases and containment measures hit new business, consumer sentiment and employment.

Despite Monday’s losses, the Hang Seng Index is still among the best performers across major world indices, with gains of about 4.2 per cent this year. Its rally last week had earlier added US$142 billion of market value, as investors expect further policy support in China to shore up stock prices.

Major markets in Asia retreated. Korean stocks lost at least 0.5 per cent, Japanese equities fell 0.9 per cent, while the Australian benchmark was little changed.

Author: Cheryl Heng, SCMP

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