Hong Kong stocks fall, as Beijing’s scrutiny of overseas IPOs weighs on tech shares

On Dec 29, 2021 43

Hong Kong’s Central district. The city’s benchmark Hang Seng Index is on track for a 1.4 per cent loss in December, adding to a 7.5 per cent slide in November. Photo: Felix Wong

The Hang Seng Index retreated 0.9 per cent on Wednesday morning, while the Tech Index sank 1.5 per cent for its biggest drop in a week
Shares of developer China Aoyuan Group, which was summoned by a Hong Kong court for guaranteeing US$131 million in debt for a subsidiary, crashed to their lowest level since May 2016

Hong Kong stocks fell on Wednesday morning, potentially ending a five-day winning streak, as Beijing’s scrutiny of overseas share sales weighed down Chinese technology stocks.

The Hang Seng Index retreated 0.9 per cent to 23,075.79, while the Tech Index sank 1.5 per cent for its biggest drop in a week. On the mainland, China’s Shanghai Composite Index lost 0.8 per cent.

Alibaba Group Holding, which owns this newspaper, declined 2.6 per cent and was among the Hang Seng’s biggest decliners. Tencent Holdings lost 1.5 per cent and Meituan fell by 2 per cent.

“Towards the end of the year, people are being cautious. They are waiting for a clearer direction in the market, while keeping an eye on Omicron developments,” said Louis Tse Ming-kwong, managing director at Wealthy Securities.

On Monday, Beijing unveiled regulations that bar companies in sensitive industries from receiving foreign investment, unless they seek a waiver from the government.

This has sent jitters through the Chinese technology sector, and erased the Hang Seng Index’s 2.4 per cent recovery over the past five days. The gauge was on track for a 1.4 per cent loss in December, adding to a 7.5 per cent slide in November.

Chinese property developers also declined on Wednesday. China Aoyuan Group was summoned by a Hong Kong court for guaranteeing US$131 million in debt for a subsidiary, according to an exchange filing on Tuesday. Aoyuan’s shares crashed 9.1 per cent to HK$1.50, their lowest level since May 2016. Country Garden Services retreated 3.9 per cent, and Hang Lung Properties fell 2 per cent.

Separately, Chinese artificial intelligence firm Sensetime will begin trading for the first time in Hong Kong on Thursday. It will be the city’s biggest IPO since September.

Key Asia-Pacific markets were mixed on Wednesday. Japanese and South Korean equities fell by at least 0.7 per cent, while the Australian benchmark rose 1.2 per cent.

Author: Cheryl Heng, SCMP