Alibaba, Lenovo drag Hong Kong stocks towards 5-week low as Shanghai retains lockdown, traders assess earnings setback
- Hang Seng extends losses as Shanghai backs away from easing lockdown in low-risk areas, reiterates to zero-tolerance policy
- Tencent, NetEase gain as China resumes approvals for new online game titles for the first time since July
Stocks in Hong Kong fell on heightened concerns about economic setbacks caused by Covid-19 lockdowns in China. Risk appetite waned amid concerns about stronger US policy tightening momentum.
The Hang Seng Index slipped 0.5 per cent to 21,102.21 at the local noon trading break, dragging the benchmark towards a five-week low. The Hang Seng Tech Index slipped 0.8 per cent while the Shanghai Composite Index declined 0.7 per cent.
Alibaba Group, Lenovo Group and Country Garden Services led index decliners, falling at least 1 per cent. Limiting losses, Tencent Holding and NetEase rose after China approved new online gaming titles for the first time since July.
While new infections in Shanghai fell on Tuesday for the first time since a citywide lockdown on March 28, authorities have backed away from reopening part of the cities designated as “low-risk.” Most residents are barred from leaving their homes, with the municipality’s top boss reiterating its zero-tolerance Covid-19 policy.
“Shanghai hasn’t seen the inflection point of the pandemic yet, which has already disrupted a range of industries and dented consumer spending,” said Fan Tingfang, a fund manager at HFT Investment Management in Shanghai. “Pressure on stabilising growth this year is mounting.”
Periodic lockdowns across mainland China have clouded corporate earnings prospects with economists calling for more stimulus to achieve the official 5.5 per cent growth target.
Major markets in Asia-Pacific all fell, with Japan being the biggest drag with more than 1 per cent loss. Traders are bracing more rate increases. A government report today may show March consumer inflation topping 8 per cent, surpassing February’s reading at four-decade high.
Among benchmark index losers, Alibaba Group slipped 1 per cent to HK$97.45. Lenovo Group slid 4.8 per cent to HK$7.73, Country Garden Services lost 4.1 per cent to HK$34.95 and Alibaba Health fell 2.6 per cent to HK$4.59.
Losses were limited by more than 2 per cent gains in Tencent Holdings and NetEase. Some 45 new video games were approved by the industry regulator, according to a statement on the website of the National Press and Publication Administration on Monday.
While Tencent and NetEase were not the recipients in the latest approvals, the decision marked an official end to a nine-month freeze prompted by growing addictions among schoolchildren.
Three companies started trading on mainland bourses. Telecoms equipment maker Vanchip (Tianjin) Technology slumped 36 per cent to 42.43 yuan in Shanghai while Hinova Pharmaceuticals sank 29 per cent to 30.30 yuan. Guangdong Real-Design Intelligent Technology rose 4.1 per cent to 33.30 yuan in Shenzhen.
Author: Zhang Shidong, SCMP