Record plunge in, Alibaba hits Hong Kong market amid US delisting move, Russia-Ukraine tensions

  • Hang Seng tumbles 3.2 per cent as tech leaders like Alibaba, and Meituan crash by more than 7 per cent
  • The US SEC asked five Chinese companies to show cause why they should not be delisted in new move following the enactment of audit inspection law

Hong Kong stocks tumbled, heading for the biggest weekly loss in two years, as Chinese companies faced renewed regulatory risks in the US. Ceasefire talks between Russia and Ukraine stalled.

The Hang Seng Index plunged 3.2 per cent to near a six-year low of 20,222.79 at the local noon trading break. The loss this week of 7.7 per cent was the steepest since the depth of the Covid-19 pandemic in March 2020. The Hang Seng Tech Index plunged 7.6 per cent, and the Shanghai Composite Index lost 2.2 per cent. tumbled by a record 16 per cent after annual loss widened. Meituan and Tencent slumped at least 5 per cent. Alibaba Group Holding crashed 6.6 per cent to a new all-time low.

“Everyone is panicking and rushing to sell” under current risk-off sentiment, said Dai Ming, a fund manager at Huichen Asset in Shanghai. “There could be more selling pressure, should the Ukraine ceasefire talks break down or oil prices climb back up.”

Beigene plunged 8.3 per cent and Yum China lost 12 per cent in Hong Kong, while HutchMed sank 15 per cent and Zai Lab shed 13 per cent. ACM Research lost 9.2 per cent in Shanghai, after its American depositary shares crashed 22 per cent in overnight trading.

US securities regulator listed the five firms on a provisional list that could lead to delisting over a three-year period. The move triggered a 10 per cent slump in a gauge tracking US-listed Chinese stocks, the most since the 2008 global financial crisis.

“We expect renewed regulatory uncertainty to dampen investor sentiment and potentially remain an overhang on Chinese [offshore stock] valuations,” he said. “Investor concern centres around a potential liquidity challenge such homecoming stocks may pose to Hong Kong’s market.”

Elsewhere, geopolitical risks added to prevailing risk aversion as Ukraine and Russia failed to make progress in talks to halt the two-week war amid wide differences. The crisis has fuelled commodity prices, stoking concerns about global inflation and recession.

Meanwhile, consumer prices in the US rose 7.9 per cent in February, the most in four decades, entrenching the Federal Reserve’s policy tightening bias as policymakers look to start raising interest rates from as early as this month.

Author: Zhang Shidong, SCMP

You might also like