Hong Kong stocks fell for a second day on lingering concerns that Beijing will extend its regulatory crackdown while traders braced for key data on China’s economic pulse.
The Hang Seng Index dropped 0.5 per cent to 26,391.62 at the close on Friday, reducing the advance this week to 0.8 per cent. Technology stocks paced losses as smartphone maker Xiaomi, Alibaba Group Holding and Tencent Holdings retreated by at least 2.4 per cent. The Shanghai Composite Index slipped 0.2 per cent.
Sentiment remained skittish as a plan released this week by the State Council, China’s cabinet, signalled policymakers will strengthen regulations to bring to order in a wider array of industries. The nation’s banking regulator was also said to be scrutinising the insurance sector for malpractices such as false advertising, according to media reports.
“China‘s regulatory crackdown now seemingly set for years ahead,” said Jeffrey Halley, an analyst at Oanda. “I doubt the cheapness of price to governmental risks ratio for China equities has finished its repricing exercise lower yet.”
Analysts from at least 15 brokerages – from UBS Group and Goldman Sachs to Citigroup, Oppenheimer and CLSA – have slashed their price targets for Alibaba’s depositary shares by at least 40 times since early November, leaving the market to guess the bottom. Alibaba owns this newspaper.
At the same time, a surge in delta cases has prompted authorities to reimpose lockdown measures and restrictions on travels in some provinces, clouding the nation’s recovery outlook. Industrial production, retail sales and fixed-asset investment in China probably moderated in July from the preceding month, according to estimates compiled by Bloomberg. The government will report the statistics on Monday.
Other markets in Asia-Pacific were mixed after US stocks charted new highs in overnight trading. The latest data showed US producer prices accelerated faster-than-expected in July, while initial unemployment claims fell for a third week and home prices rose by a record.
Elsewhere, WH Group, the world’s biggest pork processor, rose 3.3 per cent to HK$6.57 after founder Wan Long stepped down as chief executive, leaving the business empire to professional managers.
Tesla supplier Contemporary Amperex Technology climbed less than 0.1 per cent to 502.05 yuan in Shenzhen, erasing a loss of as much as 4.4 per cent. The world’s biggest maker of lithium batteries announced a plan to raise as much as 58.2 billion yuan (US$9 billion) in a private stock offering.