Hang Seng sustains rebound as China pledges to open policy toolbox while Alibaba slides on regulatory concerns

  • China’s central bank pledges to open its toolbox wider and stem any collapse in credit, deputy Governor says in briefing
  • Regulatory risks surrounding Alibaba Group re-emerge as the Biden administration reviews its cloud-computing business for potential threat to national security

Hong Kong stocks sustained a rebound, shrugging off declines in regional markets, as bets on policy easing in mainland China aided gains in property developers and banks. Alibaba Group slid on potential regulatory curbs in the US.

The Hang Seng Index rose as much as 0.4 per cent before easing to less than 0.1 per cent gain at the local midday trading break. The city’s Tech Index slipped 0.1 per cent as Alibaba Group slipped while China’s Shanghai Composite Index lost 0.3 per cent.

Developers Country Garden and China Overseas Land climbed by at least 4.9 per cent, while China Merchants Bank and Bank of China rose by 1.1 per cent and 0.7 per cent respectively.

Policymakers will open its monetary toolbox wider to ensure a stable supply of money and prevent a collapse in lending, Liu Guoqiang, Deputy Governor of China’s central bank, said in a briefing on Tuesday. It represents another sign of support since several measures to ease liquidity and funding access over the past two months to shore up the economy.

“The momentum on stabilising growth will strengthen after the cuts in the reserve requirement ratio and loan prime rate,” said Chen Xianshun, an analyst at Guotai Junan Securities. “That will revive risk appetite.”

Macau casino stocks rebounded, adding to a rally since Friday when the city unveiled its proposed gaming law reform that offered clarity to concession holders. MGM China both climbed 1.2 per cent. Galaxy Entertainment added 0.5 per cent.

A woman walks past a Bank of China branch next to the Grand Lisboa hotel and casino in Macau in December 2019.


Elsewhere, Alibaba lost 0.9 per cent after Reuters reported that the Biden administration was reviewing whether the cloud-computing business of the Chinese tech juggernaut posed a threat to US national security.

Alibaba, the owner of this newspaper, trimmed an intraday loss of as much as 1.7 per cent. The US could ultimately choose to prohibit Americans at home and abroad from using the service altogether, Reuters said, citing the people familiar with the matter.

Other major markets in the region all declined, except in South Korea. Japanese equities fell 1.8 per cent, mirroring an overnight sell-off in US markets as rising bond yields fuelled concerns about a faster-than-expected rate increase by the Federal Reserve.

Author: Zhang Shidong, SCMP

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