Tencent, Alibaba push Hang Seng into weekly loss as US sanctions more Chinese firms over Xinjiang issues
- Hang Seng Index has declined 3.5 per cent so far this week as market struggles for traction on either rate-cut bets or risk from further US sanctions
- Tech stocks remain a drag to overall sentiment as benchmark slumped to an all-time low, challenging recent bullish views as valuations cheapen
Hong Kong stocks slipped, heading for a weekly loss, after the US sanctioned more Chinese tech companies and added others to a blacklist for alleged human rights abuses in the far-west Xinjiang region.
The Hang Seng Index declined 1.3 per cent to 23,175.19 at midday trading break. The benchmark has weakened 3.5 per cent over five days, set for a fourth week of pullback in five. The Tech Index sank 2.6 per cent to an all-time low. China’s Shanghai Composite Index lost 0.9 per cent.
Tencent and Alibaba Group Holding lost at least more than 3.2 per cent, while Meituan retreated 5 per cent. Xinyi Solar, which produces solar panels in Xinjiang, sank 9.1 per cent while Xinyi Glass tumbled 5.4 per cent.
On the bright side, HSBC jumped 2.4 per cent while Standard Chartered surged 3 per cent after a surprise rate increase by the Bank of England, a move that could improve their interest margins on lending in their home markets.
The US Treasury Department sanctioned eight companies, including drone maker DJI Technology and artificial intelligence giant Megvii. The Commerce Department separately added 34 firms to its so-called entity list. The move was earlier reported by the Financial Times. China has previously rejected those accusations.
“US-China relations will continue to be tense, which will pressure stocks on the sanction list,” said Louis Wong Wai-kit, a director at Phillip Capital Management. “This added jitters to the market.”
This week’s losses continue to challenge recent upbeat views on Chinese stocks from money managers, who have been persuaded by the cheapest valuations in years and the prospects of policy easing and softening regulatory crackdown.
The Tech Index has now lost 6.4 per cent in December, set for a fifth month of slump in six, worsened also by delisting risks. More than US$700 billion of market value has been wiped out since the end of June, when Chinese authorities expanded its crackdown with a cybersecurity probe on Didi Global.
Desun Real Estate Investment Services retreated 4.5 per cent on its first day of trading in Hong Kong. Yingkou Fengguang Advanced Material, a chemical products manufacturer, soared 108 per cent in Shenzhen.
Markets in Asia-Pacific were mixed in early trading, with equities in Australia rising by 0.2 per cent. Stocks in Japan faltered by almost 1.8 per cent, while South Korea lost 0.3 per cent.
The Bank of England on Thursday unexpectedly raised interest rates, a day after the Federal Reserve decided to quicken its bond tapering plan while projecting rate increases over the next two years.
Author: Cheryl Heng, SCMP