Hong Kong stocks fall as Alibaba, Evergrande, retreat while traders eye policy easing signals amid China slowdown

  • Hang Seng Index slips from near a six-week high as traders look for policy easing signals from Beijing amid slowdown
  • Alibaba weakens 1 per cent, halting a big rally this month while Evergrande tumbles on failure to sell assets as bond repayment grace ends

Hong Kong stocks retreated from near a six-week high amid concerns about a slowdown in the Chinese economy and worsening liquidity crunch in the domestic property sector.

The Hang Seng Index fell 0.3 per cent at 26,060.26 at the local noon break. The benchmark tech index slipped from a five-week high as traders deemed this week’s rally as excessive. The Shanghai Composite Index climbed 0.5 per cent to 3,603.62.

Alibaba, the owner of this newspaper, fell 1 per cent to HK$174. The stock had surged 6.7 per cent on Wednesday on speculation its ties with regulatory authorities were improving after co-founder Jack Ma made his first overseas trip since authorities foiled Ant Group’s stock listing plans.

China Evergrande slumped 10.9 per cent to HK$2.63 while Evergrande Property Services Group lost 6.5 per cent. The developer terminated a US$2.6 billion deal to sell a 50.1 per cent stake in its property services unit following a disagreement on deal terms. The proposed buyer, Hopson Development, jumped 5.2 per cent to HK$26.

Other developers were steady as statements by top Chinese officials helped calm jitters amid an industry slump and heightened concerns about bond defaults. The central bank Governor has said the Evergrande risk is controllable and vice-premier Liu He added that reasonable funding needs are being met.

“The Evergrande crisis embodies the delicate balance for authorities between containing leverage in the economy while preserving financial stability,” Rohini Malkani, a senior ratings analyst at DBRS Morningstar, said in a report.  “The fallout could have unanticipated effects that spread through the financial system and economy, potentially leading to sharply lower growth prospects over the next few years.”

China Overseas Land and Investment and Longfor Group advanced more than 6 per cent. China Resources Land rose 4.9 per cent. Country Garden and its property management arm jumped more than 4.1 per cent.

Stocks surged this week to the highest level since September 10 as investors bet Beijing will ease policies to shore up growth as a government report showed new home prices shrank for the first time in six years. The property sector contributed to about one-fifth of gross domestic product in 2020.

Elsewhere, Ping An Insurance jumped 8 per cent in Hong Kong and 6.1 per cent in Shanghai after net profit grew by about one-third to 11.6 billion yuan (US$1.8 billion) in the third quarter from a year earlier.

Three stocks began trading for the first time in mainland China. Bisen Smart Access soared 85.8 per cent to 16.87 yuan. Qingdao Foods jumped 44 per cent and Ningbo Dechang Electrical Machinery rose 33.8 per cent.
Author: Iris Ouyang, SCMP

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