Tencent, BYD, EV stocks slide in Hong Kong as traders focus on Fed risk before US jobs, inflation reports

  • Economists predict a robust labour market despite a slight pullback in September in nonfarm payrolls report due later today
  • Bets for a Fed pivot away from its aggressive tightening pace are not gathering pace after an early promise this week

Hong Kong stocks tumbled, tracking overnight losses in US equities, on concerns the Federal Reserve will press on with its policy tightening pace, with no meaningful decline in inflation and labour market conditions.

The Hang Seng Index retreated 1.1 per cent to 17,809.40 at the local noon trading break, trading near the lowest level in 11 years. The Tech Index slumped 2.8 per cent. Financial markets in mainland China, shut this week for National Day, will reopen on Monday.

Tencent dropped 2.4 per cent to HK$271, Alibaba Group lost 1.2 per cent to HK$82.15, while NetEase lost 1.4 per cent to HK$124.90. EV maker Li Auto sank 16 per cent to HK$79.35 and Nio slumped 9 per cent to HK$113.90. Chinese developers Longfor and Country Garden slipped 8 per cent and 11 per cent respectively.

The Hang Seng Index is still headed for about 4 per cent gain this week, the best rally since May, courtesy of a 5.9 per cent surge on Wednesday. The 73 index members gained HK$8.6 billion (US$1.1 billion) of market value this week before Friday, narrowing the losses this year to HK$4.6 trillion.

Benchmark indices in Japan and Australia fell by about 0.6 per cent while the gauge in South Korea was little changed. The S&P 500 Index lost 1 per cent on Thursday, while the Nasdaq Composite declined 0.7 per cent on risk-off sentiment before key economic reports.

“Despite the rally in risk assets [this week], there are clear indications of macro environment deterioration,” strategists at JPMorgan Private Bank wrote in a report on Friday, with global central banks are not yet ready to change course. “Our base case now expects a shallow US recession to begin around mid-year 2023.”

American employers probably added about 255,000 jobs in September, according to the median forecast in a Bloomberg survey before a government report on nonfarm payrolls later today. Payrolls jumped 315,000 in August. A report on October 13 may show consumer prices rose 8.1 per cent in September versus 8.3 per cent in August.

Hong Kong developers declined in sync with their mainland peers. New World Development slid 2.3 per cent to HK$21.30 while Sun Hung Kai Properties weakened 0.2 per cent to HK$90.75 and Henderson Land slipped 2.4 per cent to HK$22.25. Goldman Sachs this week forecast a deeper slide in home prices in the city as higher borrowing costs sap demand.

Limiting losses, casino operator Galaxy Entertainment climbed 0.4 per cent to HK$49.10 while Sands China gained 3 per cent to HK$21.90.

Elsewhere, China’s foreign-exchange reserves fell for a second straight month in September to US$3.029 trillion, the People’s Bank of China reported on Friday, suggesting efforts to support the yuan as a US dollar index surged to a 20-year high last month on the back of Fed rate increases.

Author: Jiaxing Li, SCMP

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