HSBC, Xpeng drag Hang Seng to 2-year low on lockdown, weak China auto sales while Ukraine war stokes inflation concerns

  • HSBC, Sun Hung Kai Properties are among index losers as Hong Kong residents face potential lockdown; Xpeng leads EV makers lower on weak mainland China sales
  • A surge in oil prices could reignite global inflation, choking economic recovery; Rusal sinks 17 per cent

Hong Kong stocks fell back to a two-year low as lockdown worries and weak auto sales in mainland China knocked confidence. A surge in commodity prices triggered by the Ukraine war heightened concerns inflation will choke economic recovery.

The Hang Seng Index declined 1.1 per cent to 22,518.18 at the noon trading break. The Tech Index lost 1.5 per cent, while the Shanghai Composite Index dropped 0.4 per cent.

Sunny Optical, Xinyi Glass and HSBC slumped by more than 6 per cent, pacing benchmark index losers. Hong Kong’s top developers like Sun Hung Kai Properties, New World and CK Asset slipped amid worries about a citywide lockdown.

XPeng sank 4.7 per cent after Chinese electric-vehicle makers reported lacklustre sales in February, likely due to the Lunar New Year holiday. BYD lost 0.8 per cent and Geely Auto slid 1.8 per cent. Li Auto was unchanged after tumbling as much as 1.6 per cent.

Crude oil futures topped US$100 a barrel the first time since 2014, reaching US$107.29 in Asian trading hours on Wednesday. Gold advanced 2.3 per cent to a one-year high of US$1,943.80 an ounce. A top Russian official said it was “too early to assess” the results of peace talks held on Monday.

Russian aluminium producer Rusal tanked 17 per cent to HK$3.89 as western sanctions on Russian entities and individuals widened. The stock has lost 52 per cent of its market value since the Ukraine invasion.

“Given that Russia and Ukraine have big sways in oil, natural gas and grain industries, the war will for sure stoke global inflation,” said Zhou Jianhua, an analyst at Central Securities in Shanghai. “That will have a profound impact on the global economy.”

Commodities are rallying at a time when the inflation is accelerating at multi-decade high in the US and UK, inducing more hawkish stance from central banks. Federal Reserve Chair Jerome Powell is due to deliver a speech to lawmakers later Wednesday on its rate-hike path.

Oil explorers CNOOC jumped 4.2 per cent and PetroChina rose 3.2 per cent as the International Energy Agency said Ukraine conflict could threaten global supply.

Elsewhere, Tencent dropped 0.6 per cent, giving back some of its rally this week. The WeChat operator jumped 2.3 per cent on Monday on reports a Chinese business tycoon spent US$5 million on its New York-traded shares.

Author: Zhang Shidong, SCMP

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