Alibaba, push Hang Seng to biggest drop in 2 weeks before Fed meeting while developers slide amid more distress

  • Tech, developers tumble as traders take money off the table amid concerns about policy tightening risks
  • The Fed will hold its first 2022 rate-setting meeting this week; its hawkish stance in recent weeks has erased billions from global tech stocks and cryptocurrencies

Hong Kong stocks fell by the most in two weeks as tech companies slumped further with global peers before a Federal Reserve meeting, while property developers weakened on concerns a slowdown will worsen a cash crunch in the industry.

The Hang Seng Index retreated 1.2 per cent to 24,351.38 at the noon trading break, the lowest level in almost a week. The city’s Tech Index dropped 1.7 per cent for a third day of decline, while China’s Shanghai Composite Index declined 1.1 per cent.

More than 50 of the 64 Hang Seng Index members suffered losses. Alibaba, the owner of this newspaper, declined 1.3 per cent while its health unit slipped 3.9 per cent. retreated 2.8 per cent, while Meituan and Tencent fell by at least 0.9 per cent.

The Federal Reserve, which holds its first 2022 rate-setting meeting this week, has signalled a hawkish stance in the past month, roiling global markets as investors trimmed bets on US tech stocks and cryptocurrencies.

“The Fed has effectively abandoned its prior guidance by suggesting it’s ready to start raising rates” before achieving its employment mandate, BlackRock strategists said in a note on Tuesday. “By doing so, it may have added to the confusion about the expected path of rates. Markets have quickly shifted their short-term expectations to include earlier and more rate hikes this year.”

Major Asia-Pacific markets retreated. Shares in Japan lost 1.9 per cent, while Korean stocks retreated 2.8 per cent. The Australian benchmark index sank 2.8 per cent.

In Hong Kong, Chinese developers tumbled, with an index tracking the industry leaders losing 0.9 per cent in the biggest setback in a week, as Agile Group and Yuzhou Group added to signs of persistent liquidity stress despite recent policy-easing measures.

Agile Group and China Resources Land both slipped by more than 0.7 per cent. Hong Kong peers Henderson Land and Sun Hung Kai Properties also weakened. Evergrande tumbled 3.8 per cent as the home builder sought more time from creditors to implement a workout plan.

Hong Kong also saw an escalating outbreak of the Omicron variant, with daily infections hitting more than 100 cases in the past two days, the highest in 18 months. Experts warned that stringent social-distancing curbs to stem the fifth wave were expected to hammer the economy this quarter.

Author: Cheryl Heng, SCMP

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