Hong Kong stocks slip on Shimao downgrade, Macau regulatory risks while Alibaba drags tech index
- JPMorgan downgraded Shimao Group on heightened liquidity concerns, stoking default risks among Chinese developers
- Hang Seng Properties Index has declined 4.5 per cent, erasing more than US$6 billion of market value since December 9 when China Evergrande and Kaisa defaulted on their debts
Hong Kong stocks slipped for a third day as financial troubles among Chinese developers reignited concerns about debt defaults and cracks in China’s property market.
The Hang Seng Index retreated 1.3 per cent to 23,653.16 at the local noon trading break. The Tech Index lost 2 per cent while China’s Shanghai Composite Index dropped 0.3 per cent.
Property stocks were among the biggest losers. Country Garden Services sank 8.7 per cent, China Resources Land slid 4.7 per cent and China Overseas Land weakened 3.5 per cent. Alibaba Group, Tencent Holdings and Meituan fell by at least 1.2 per cent.
The Hang Seng Properties Index has lost more than 4.5 per cent since Fitch Ratings declared China Evergrande and Kaisa Group in default on December 9 after both indebted developers failed to repay offshore bondholders.
“Markets are worried that more mainland property developers are having liquidity problems,” said Kenny Tang Sing-Hing., managing partner at money manager Venture Smart Asia. Shimao’s asset-sale to its unit “highlights cash flow concerns” in the group, he added.
Shimao Group tumbled 11.9 per cent to HK$6.24, despite denying media reports about extending its trust-loan repayment plan. Its property services unit crashed 24 per cent. JPMorgan downgraded both stocks to underweight on heightened liquidity concerns after it sold some assets to its unit, according to Bloomberg.
Macau casino operators suffered steep losses, with Wynn Macau and MGM China plunging by more than 7.4 per cent. Fitch placed some casino concessionaires on rating watch, citing imminent regulatory risk. Sands China slipped 6.5 per cent, while Galaxy Entertainment declined 3.8 per cent.
The arrest of Alvin Chau, Macau’s casino junket boss, has stoked fears China is cleaning up the industry and this has added to worries surrounding new rules and concession terms for existing gambling operators.
Goodwill E-Health Info, which develops medical information software, climbed 7 per cent on its market debut in Shanghai. In Hong Kong, logistics firm Hangzhou SF Intra-City Industrial slumped 9.9 per cent.
Major markets in Asia Pacific retreated. South Korean and Japanese equities declined by about 0.7 per cent, while the benchmark in Australia was little changed.
Author: Cheryl Heng, SCMP