Hong Kong stocks slip from four-week high as Alibaba paces tech losses and energy crunch seen derailing economic recovery

  • Tech stocks retreat as Alibaba surrenders some of its 24 per cent rebound from October low
  • Higher energy and metal prices are seen hitting power producers and manufacturers, dimming economic recovery outlook

Hong Kong stocks retreated from a four-week high as tech leaders from Alibaba Group Holding to Meituan faltered amid concerns surging global energy prices will undermine economic revival efforts.

The Hang Seng Index slipped 1 per cent to 25,066.05 at the local noon break after reaching the highest level since September 14 on Monday. The Hang Seng Tech Index tumbled 2.2 per cent, giving up about half of the advance a day earlier. The Shanghai Composite Index lost 1 per cent.

Investors locked up gains from the swift rebound in Chinese tech stocks in recent days as valuations cheapened, underpinned also by expectations that the worst in tech-sector regulatory crackdown is over.

Alibaba, the owner of this newspaper, slid 3.2 per cent to HK$162.50 to surrender some of the 24 per cent surge from an October 5 record low. Meituan and Tencent Holdings lost at least 1.5 per cent. Sunny Optical slumped 5 per cent to HK$191.50, the worst index performer, after shipments of handset lenses slumped in September, it said.

“The policy headwind will probably persist longer than expected,” said Guo Yuantao, an analyst at China Merchants Securities. “We are still cautious about the internet, gaming and education sectors, though the valuations are low.”

A surge in energy costs is denting sentiment. Crude oil futures traded close to US$80 a barrel, with the global energy crunch disrupting supply and pushing up commodity prices. Aluminium, for example, hit a 13-year high. They added to mounting concerns that higher input costs will hurt profit margins of other industrial companies, such as manufacturers and power producers.

Other major markets all headed south on Tuesday, with Taiwan’s benchmark falling by the most with a 1.6 per cent decline after reopening for trading. US equities also sank overnight on jitter about high energy costs.

Elsewhere, the city may be facing a shutdown due to extreme weather in the Coming days. The Hong Kong Observatory said the city’s residents should prepare for a gale or No 8 as early as Tuesday afternoon as Severe Tropical Storm Kompasu edges closer.

A slew of data this week on China’s economic health for September is expected to keep the market on cautious mode. Factory-gate prices probably accelerated last month, according to the estimates of economists surveyed by Bloomberg before a report on Thursday.

Author: Zhang Shidong, SCMP

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