Hong Kong stocks set for first weekly drop this month amid record Covid-19 infections, Russia-Ukraine jitters
- Stocks are headed for the first weekly loss in February amid heightened risk aversion on local Omicron cases, potential war in Ukraine
- Eyes on Hang Seng quarterly index rebalancing after Friday’s market close with SMIC, Nongfu Spring among potential additions
Hong Kong stocks dropped, with the benchmark set for the first weekly loss this month as rising geopolitical risks and local Covid-19 infections sapped risk appetite.
The Hang Seng Index slipped 0.5 per cent to 24,674.91 at the local noon trading break, heading for a 0.9 per cent loss in week. The Hang Seng Tech Index retreated 0.6 per cent, while the Shanghai Composite Index was little changed.
Power-tool maker Techtronics, ENN Energy, Anta sports, WuXi Biologics and Li Ning led declines, each sliding by at least 1.9 per cent.
Risk aversion heightened following an overnight rout in US equities after the White House ratcheted up warning of Russia’s possible invasion of Ukraine. The US and Russia agreed to meet next week in Europe to stave off the crisis. Gold futures reached the highest since June, while 10-year Treasury yield dipped from near a two-year high.
“The meeting is certainly a positive step towards a peaceful resolution,” said Matthew Simpson, an analyst at StoneX Financial in Sydney. “But traders would be wise to remember this is a fluid situation and things can change quickly, so nothing should be taken for granted.”
Alibaba Group Holding and Tencent Holdings rose by at least 0.2 per cent, even after the US called out their market platforms for listing counterfeit goods. NetEase jumped 2.3 per cent, as Credit Suisse touted the gaming company and Tencent as likely winners in their metaverse pursuit.
Separately, Hang Seng Indexes Company will report its quarterly index rebalancing after the market close. Analysts tipped SMIC, Nongfu Spring, China Feihe and Smoore among stocks to join the benchmark index.
Elsewhere, Hong Kong authorities are stepping up measures to control Covid-19 outbreaks that have resulted in a record jump in daily cases. The city is considering universal testing to combat the fifth wave of infections as businesses and medical facilities came under strain.
CK Hutchison dropped 1.2 per cent while CK Infrastructure retreated 0.8 per cent. Chairman Victor Li Tzar-kuoi, the elder son of Li Ka-shing, took a Covid-19 test after suffering symptoms including coughing and a hoarse throat.
Huitongda Network rose 1.6 per cent and Clarity Medical slumped 6.3 per cent on their trading debut in Hong Kong. Zhejiang Biyi Electric Appliance surged by the 44 per cent daily limit in Shanghai, while vaccine maker Hualan Biological gained 30 per cent in Shenzhen.
Author: Zhang Shidong, SCMP