Hong Kong stocks slide to one-year low as Omicron variant alarms markets while Meituan, Macau casinos add to woes
- Stocks weaken as investors face a triple whammy of Omicron infections, Meituan’s poor earning and Macau gambling crackdown
- New Covid strain threatens to disrupt global economies after governments imposed new lockdowns and banned related travels
Hong Kong stocks fell to more than a one-year low on concerns the spread of Omicron coronavirus strain will prompt more lockdowns and hurt economic recovery. Meituan slumped on weak earnings while a gambling crackdown hit Macau casino operators.
The Hang Seng Index retreated 0.5 per cent to 23,956.43 at the local noon trading break, the lowest level since October 5, 2020. The Hang Seng Tech Index declined 0.2 per cent after falling almost 1 per cent, while China’s Shanghai Composite Index was little changed.
Global markets sold off after the World Health Organization labelled the new Covid strain Omicron as a “variant of concern.” New cases have spread in Europe, prompting the UK, US and some European governments to ban related travels. Hong Kong recorded two such cases last week.
Research by Italian scientists showed the Omicron had 43 spike protein mutations, a far higher rate of mutation compared to 18 for the Delta variant. The city’s benchmark slumped 16.6 per cent since Hong Kong’s first recorded Delta case in late June.
Last week’s discovery of the new strain sparked global concern and border closures amid fears it is highly infectious, even as South Africa, where it was first discovered, said the variant had “mild” symptoms so far.
“A resurgence of Covid-19 cases and the necessary restrictions could continue to pressure the demand side and the job market as well as disrupt the supply chain, not to mention fiscal constraints on more support packages, diminishing monetary policy scope and headwinds on exports,” said Bruce Pang, head of strategy and macro research at China Renaissance Securities in Hong Kong.
The Hang Seng Index has lost 6.2 per cent in November, erasing some US$200 billion in market value as weak tech earnings spooked investors. Meituan was among the biggest index losers as it tumbled 7.7 per cent to near a one-month low of HK$242.40. The food delivery platform operator posted a wider than expected loss of 10 billion yuan (US$1.6 billion) last quarter, partly because of regulatory penalties.
Sands China and Galaxy Entertainment sank more than 6.3 per cent, leading Macau casino operators lower. Local authorities arrested Alvin Chau Cheok-wa, chief executive of the city’s biggest casino junket operator Suncity Group, in a probe into illegal cross-border gambling.
Suncity stock was halted from trading while Chau’s Sun Entertainment Group crashed 41 per cent in early trading.
Major Asian markets were mostly weaker. Equities in South Korea and Japan each fell 0.5 per cent, while the benchmarks in Australia declined 0.4 per cent.
Author: Cheryl Heng, SCMP