Hong Kong stocks slide on lockdown concerns, Ukraine stand-off while Alibaba weakens on Temasek stake sale

  • Stocks weaken with regional markets on city lockdown concerns, Russia-Ukraine stand-off
  • China injects US$15.7 billion of liquidity to support businesses and counter a slowdown in economy

Hong Kong stocks weakened amid concerns a wider city lockdown to stem the fifth wave of Covid-19 outbreak will hurt the economy, while geopolitical risks over Russia and Ukraine fanned a flight to safe haven assets.

The Hang Seng Index slipped 0.7 per cent to 24,383.64 at the local noon trading break after a measure of volatility reached a four-month high. The benchmark retreated 1.4 per cent on Monday, the most in two weeks. The Tech Index was little changed, paring a 0.8 per cent advance.

Chinese oil producers and insurance stocks were the worst performers. PetroChina and Sinopec dropped more than 3 per cent, surrendering some of their rallies on Monday on the back of crude oil rally. China Life Insurance and Ping An Insurance Group sank at least 3.3 per cent.

“Hong Kong’s economy now faces more pressure from the plummeting consumption related sectors,” Natixis analysts wrote in a February 14 note to clients. The government should consider expanding its fiscal stimulus compensate residents and the affected industries, they added.

The Shanghai Composite Index gained 0.4 per cent, as China’s central bank injected 100 billion yuan (US$15.7 billion) of liquidity into the system through the medium-term lending facility to support businesses to arrest an economic slowdown.

Alibaba Group Holding, the owner of this newspaper, lost 0.3 per cent. Singapore’s state investment firm Temasek Holdings pared its ownership in the Chinese e-commerce group last quarter. It bought rivals JD.com and Pinduoduo, according to 13F filing late Monday.

Markets in Asia-Pacific sold off in tandem with global peers, after traders ramped up bets the Federal Reserve will raise its key interest rate for six or seven times this year, against the previous projection for three times. US inflation quickened last month at the fastest in four decades. Ten-year US Treasury yield rose above 2 per cent last week, the highest since July 2019.

“Most geopolitical issues have little impact on markets beyond creating very short-term volatility,’” Kristina Hooper, a strategist at Invesco, wrote in a note. “But this could be different simply because of the potential impact on the price of commodities at a time when inflation is driving central bank actions.”

Gold futures climbed to an eight-month high and oil futures topped US$95 a barrel after the US warned that Russia could invade Ukraine at any day, stoking a flight to safety. Oil surged on fears of supply disruption.

Chengdu KSW Technologies, a maker of telecommunications equipment, rose 18 per cent from the initial public offering price to 40.01 yuan on the Star Market in Shanghai.

Author: Zhang Shidong, SCMP

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