Hong Kong Stocks Slide over China's Economic Recovery
  • June 9, 2023
  • Team Hongkong Journalist
  • 0

As a result of China’s loss in industrial profits, which pointed to a slow economy, investor confidence suffered and Hong Kong equities continued to fall. The excitement that had followed the provisional agreement to raise the US debt ceiling was dimmed by this.

On Monday, the Hang Seng Index reached six-month lows and retraced some of its earlier gains before closing 1% down at 18,551.11. The Shanghai Composite, which is mostly impacted by big state-owned companies, witnessed an increase of 0.3 percent while the Tech Index fell by 1.2 percent.

Notably, Meituan, the world’s largest food delivery company, fell significantly by 8.1 percent and reached HK$115.80, its lowest level since March 2022. JD.com, an e-commerce site, fell 1.7 percent to HK$127.90, Tencent sank 2.9 percent to HK$313.20, BYD, the manufacturer of electric vehicles, down 2% to HK$229.80, and Geely Auto dropped 1.1% to HK$9.18, both of which added to the overall fall.

Following its impressive earnings report, NetEase witnessed a large climb of 7.2 percent to HK$139.90, offsetting some of the losses. Baidu, the operator of the search engine, also enjoyed a significant gain of 2.7 percent to HK$119.70. China’s largest chip manufacturer, Semiconductor Manufacturing International Corporation (SMIC), increased 2.8 percent to HK$20, while PC manufacturer Lenovo experienced a 3.9 percent boost to HK$7.42

The second-largest economy in the world’s news, China, had a negative impact on the market’s mood. According to figures from the National Bureau of Statistics (NBS), China’s industrial earnings decreased by 20.6 percent from January to April of this year compared to the same time last year, while the pace of fall reduced from the first quarter’s 21.4 percent. Wang Jun and other analysts at BOCI Securities observed on Monday that the market’s major worry was still the economy’s poor performance. According to Wang, the lack of a strong foundation for the economic recovery has caused continued expectation adjustment and a protracted correction.

The decision to suspend the US$31.4 trillion debt ceiling, which was made possible by bipartisan cooperation between Republicans and Democrats, was the initial source of confidence in the midst of turmoil.

As a result, the biggest economy in the world escaped a historic default. Clifford Bennett, the chief economist at ACY Securities, noted that despite the cautious market reaction, real relief wouldn’t materialize until the bill clears the House.

The Hang Seng Index has reversed 18.2 percent since the year’s beginning, wiping out roughly US$600 billion from Hong Kong’s stock market as the trade for China’s reopening lost steam. Last Monday, the S&P ASX 200 in Australia rose 0.9 percent, the Nikkei 225 in Japan rose 1 percent, and the Kospi Index in South Korea rose 0.2 percent in other important Asian markets.

- Published By Team Hongkong Journalist

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