Hong Kong stocks retreat as China rejects extraordinary monetary stimulus while manufacturers raise alarm on power crisis

  • Hang Seng Index snaps a two-day advance as China’s central bank says ‘no need’ for asset purchases to revive faltering economy
  • Meituan, Tencent, Alibaba lead losses while big and small manufacturers feel the pinch of power shutdown in many mainland provinces

Hong Kong stocks snapped a two-day advance as technology stocks paced losses as China’s central bank rejected any plan for asset purchases. Manufacturers also declined amid a power shutdown in mainland provinces.

The Hang Seng Index declined 0.5 per cent to 24,368.87 as of 10.21am local time. The Hang Seng Tech Index slumped 2.2 per cent with Alibaba Group Holding, Tencent and Meituan easing by more than 2.5 per cent. The Shanghai Composite Index dropped 1.3 per cent to 3,556.93.

China will maintain a normal monetary policy for as long as possible, People’s Bank of China Governor Yi Gang said in an article in Journal of Financial Research, a publication managed by the central bank. There’s no need for asset purchases, he added.

China Evergrande rallied 13 per cent to HK$3.03, after it announced a plan to sell assets to ease concerns about defaults. It agreed to sell a 19.93 per cent stake in Shengjing Bank for just under 10 billion yuan (US$1.55 billion) to repay bank borrowings. The distressed developer faces four deadlines on bond interest payments in the coming month.

Evergrande’s headquarters in Shenzhen was besieged by retail investors earlier this month. The group’s debt crisis continues to sway market sentiment amid official silence.

Traders are also worried about the state of power outages in mainland China after major manufacturing provinces started restraining electricity consumption to conserve energy for winter months and to control emissions. SMIC dropped 1.1 per cent to HK$21.75 while Hua Hong Semiconductor slipped 2.7 per cent to HK$40.75.

Five stocks began trading for the first time. Dongguan Rural Commercial Bank plunged 18 per cent while Transcenta Holding lost 23 per cent in Hong Kong. In mainland China, Anhui Huaertai Chemical surged 44 per cent, Zhongjie Jiangsu Technology more than tripled and Tibet Duorui Pharmaceutical jumped 83 per cent.

Author: Iris Ouyang, SCMP

Iris Ouyang is a business reporter for the Post. She has reported in Washington D.C., Beijing, and Hong Kong in the past several years for both Chinese and international media organisations such as Caixin, Phoenix Finance, MNI, USA Today, MarketWatch and American Banker.

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