Alibaba, lead stock losses after stunning rebound in Hong Kong as investors await China policy stimulus, Biden-Xi call

  • Rally in Chinese tech stock pauses after a stunning 17 per cent rebound fuelled by Beijing’s verbal support for markets
  • Hang Seng Index members recouped US$468 billion over the past two days, more than they lost the sell-off earlier this week

Hong Kong stocks fell, halting a stunning two-day rebound in Chinese tech stocks, as investors wait for China to deliver policy measures to complement its vow to shore up the economy and stabilise the market.

The Hang Seng Index retreated 2.4 per cent to 20,988.53 at noon trading break, after surging 17 per cent over the past two days. The benchmark had earlier slumped to the lowest in a decade earlier this week in the worst pullback since mid-2015.

The Tech Index slipped 5.6 per cent, while the Shanghai Composite Index fell 0.2 per cent. declined 9.2 per cent to HK$231 while Alibaba Group Holding lost 6.6 per cent to HK$95.30. Tencent and Meituan both retreated at least 4.4 per cent.

Despite Friday’s weakness, the market was set to log the first weekly gain of more than 2 per cent, reversing a four-week losing streak.

“Issues that drove down the market earlier this week have not been resolved, such as the accounting concerns of Chinese ADRs and the Russia-Ukraine conflict” said Mark Po, head of research at China Galaxy International Securities in Hong Kong.

Investors are also waiting for the outcome of a call between President Joe Biden and his Chinese counterpart Xi Jinping later Friday, he added.

The 66-member Hang Seng Index clawed back US$468 billion of market value over Wednesday and Thursday after a State Council committee and the nation’s market regulator voiced support for the markets. Renewed concerns about the Ukraine conflict and US delisting pressures have been weighing on sentiment and earnings outlook.

Economists at Wall Street banks including Goldman Sachs expect China to unveil more measures as a raging outbreak of Omicron and weak credit growth cloud the nation’s recovery outlook.

Three firms made their trading debut on mainland bourses. Shenzhen KTC Technology, a producer of flat-screen display panels, jumped 33 per cent. Beijing Navigation Control Technology lost 15 per cent. Shaanxi Lighte Optoelectronics sank 12 per cent.

Markets in Asia-Pacific were mostly stronger. Japanese and Australian shares gained at least 0.2 per cent, while the South Korean equities added 0.1 per cent.

Author: Cheryl Heng, SCMP

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