Alibaba, NetEase drag Hong Kong stocks from two-month high as Nasdaq peers enter correction phase

  • Hang Seng Index trims gain for the week to 1.6 per cent as Alibaba, NetEase slip while their Nasdaq peers enter a correction phase
  • Stocks in Hong Kong have gained a cumulative US$105 billion in market value this week on China easing bets before today’s pullback

Hong Kong stocks dropped from a two-month high, trimming gains for the week, following jitters in global markets after a rout drove a key US technology gauge into a correction phase.

The Hang Seng Index fell 0.8 per cent to 24,766.26 at the local noon trading break, reducing the rally this week to 1.6 per cent. The Tech Index lost 1.3 per cent, while China’s Shanghai Composite Index retreated 0.8 per cent.

E-commerce platform operator Alibaba Group Holding and gaming firm NetEase declined by at least 4 per cent while HSBC fell almost 3 per cent. Before Friday’s pullback, stocks in Hong Kong had accumulated US$105 billion of market value this week on policy-easing bets in China.

Markets in Japan, South Korea and Australia slipped by more than 1 per cent, tracking weaker US equities overnight. A late sell-off in the Nasdaq 100 members has now snowballed to 10 per cent since the index hit a record-high in November, roiled by the Federal Reserve’s hawkish stance on interest rates.

Early losses in Hong Kong were comparatively muted, as traders retained bets that China’s policymakers will keep shoring up the nation’s economic growth after measures to inject liquidity, lower borrowing costs and loosen credit in the housing market over the past month.

“Tightening in the US will have a limited impact on Hong stocks, which are one of the cheapest in the world,” said Zhang Yidong, a strategist at Industrial Securities in Shanghai. “China’s monetary policy is independent from the rest of the world. That will help sustain a rebound on Hong Kong stocks probably through March.”

The Hang Seng Index has risen for a fifth week, the longest streak in two years. Even so, its members trade at 11.7 times projected earnings, the cheapest among major markets after Brazil, according to Bloomberg data.

Country Garden slumped 5.9 per cent, the biggest index loser. China’s biggest developer by sales raised HK$3.9 billion (US$500 million) from a convertible bond sale to help repay short-term offshore borrowings, according to an exchange filing. It will separately use internal cash to repay a January 2022 bond.

Macau’s casino operators rallied after China’s State Council unveiled a five-year plan to bolster the development of the tourism industry, in which outbound travels will be promoted on condition Covid-19 is kept under control. Sands China rose 3.6 per cent and Galaxy Entertainment added 1.8 per cent.

Elsewhere, chip maker Halo Microelectronics surged 33 per cent from the initial public offering price on the first day of trading in Shanghai.

Author: Zhang Shidong, SCMP

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