Image Credits - Reuters
Hong Kong stocks faced a further downturn on Monday, extending losses from the preceding week, as investor sentiment was dampened by the absence of more robust government support measures and accelerating geopolitical uncertainties. The Hang Seng Index retreated by 0.2 per cent, closing at 15,510.01, compounding losses from the previous week when the benchmark saw a decline of 2.6 per cent. The Hang Seng Tech Index mirrored the trend with a similar drop, and the Shanghai Composite Index slid by 1 per cent.
Concerns over possible geopolitical risks and the perceived inadequacy of government support measures have been major factors contributing to the persistent bearish sentiment in the Hong Kong stock market. Investors are observing the market dynamics, and uncertainties have led to cautious decision-making.
Chinese property developers were among the sectors facing notable declines, with Longfor Group sinking 4.1 per cent to HK$8.34, and its peer China Resources Land retracing 1.1 per cent to HK$23.25. Tech giants Alibaba Group and Baidu suffered marginal losses, slipping by 0.1 per cent to HK$70.65 and 1.1 per cent to HK$100.90, respectively. In the electric vehicle sector, Li Auto recorded a 0.7 per cent loss at HK$111, while BYD shares shed 0.6 per cent, closing at HK$171.70.
Adding to the market unease, the China Securities Regulatory Commission (CSRC) stated on Sunday taking a vow to curb wild fluctuations in the stock market. The regulatory body outlined intentions to crack down on market manipulation, vicious short selling, insider trading, and fraudulent listings. However, the statement fell short of detailing particular measures to revive investor confidence or stabilize stocks, leaving investors frustrated with what they perceive as Beijing’s underwhelming stimulus efforts.
The geopolitical risks also discouraged the mood because the former President of the United States, Donald Trump asserted that if elected, he might levy tariffs of over 60% on Chinese goods. The Hang Seng index became the worst-performing benchmark across the globe in 2024 because of a decline of almost 9% in the year to date. Wang Jun, who is an analyst at BOC International stated, “Expectations about weak domestic demand in China and no interest rate cut by the Fed have poured cold water on market sentiment. The key to a recovery in stock lies in the establishment of key economic data and an improvement in liquidity.”
Wuxi AppTec bounced back 4% to HK$45.45 after the biopharmaceutical company asserted that it is not going to pose a national security risk to any country responding to a U.S. bill aiming to ban Chinese drug makers from doing business with the government.
As global economic uncertainties persist and geopolitical tensions add another layer of complexity, market participants are eagerly awaiting clearer signals from regulatory authorities on strategies to instil confidence and bolster stability in the Hong Kong stock market.