Hong Kong stocks tumble as China factory report revives policy tightening concerns, tech stocks end March mayhem

Zhang Shidong
·4-min read

Hong Kong stocks fell in March, its first loss in six months, after an official report showed China’s manufacturing expanded for more than a year, bolstering the case for dialling back policy support in the Asian nation. Tech stocks completed their worst month in a year.

The Hang Seng Index halted a three-day gain with a 0.7 per cent setback to 28,378.35 at the close of trading on Wednesday, reversing an intraday gain of as much as 0.9 per cent. Pork processor WH Group and BOC Hong Kong Holdings led the index losers, each falling by at least 4.6 per cent.

The CSI 300 Index of biggest stocks in Shanghai and Shenzhen slipped 0.9 per cent. The nation’s top liquor distiller Kweichow Moutai, which carries the biggest weighting in the benchmark, dropped 2.3 per cent after reporting a 13 per cent gain in 2020 earnings. The result was in line with a forecast of 15 per cent gain issued by the company in January.

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Kweichow Moutai expects to boost its revenue by 10.5 per cent this year, it said in the annual report, versus 11 per cent recorded a year earlier.

China’s Purchasing Managers’ Index (PMI) rose to 51.9 from 50.6 in February, the statistics office said on Wednesday, exceeding the median estimate of 51.2 in a Bloomberg survey of economists. The gauge has remained in the expansionary territory of more than 50 since March last year, when China put the pandemic under control.

“Onshore liquidity may tighten as economic data continues to improve,” said Stephen Innes, a strategist at AxiCorp. “March PMI will be the first leading indicator.”

Elsewhere in the region, Japan’s benchmark stock index declined on Wednesday, as financial stocks reeled from losses tied to Archegos Capital Management. Mitsubishi UFJ Financial Group followed Nomura in flagging losses on the forced sales of stocks at the troubled New York fund.

Other major markets in Asia were mixed after benchmark 10-year Treasuries hit a 14-month high of 1.72 per cent on Wednesday. President Joe Biden is expected to roll out on Wednesday details on increased government spending to reduce inequality and strengthen infrastructure. A revamp of the tax code is also part of the plan.

The Hang Seng Index fell 2.1 per cent this month, breaking a five-month winning streak. The CSI 300 Index slumped 5.4 per cent after losing 0.3 per cent in February, capping its first back-to-back losses since March 2020.

On a quarterly basis, Hong Kong stocks were still up by 4.2 per cent, adding to a powerful 16 per cent surge for the preceding three-month period. The CSI 300 completed its first quarterly decline in a year with a loss of 3.1 per cent, after mounting a massive 41 per cent rally over the preceding three quarters.

Technology stocks ended the day little changed to finish March with an 8.6 per cent loss, the worst since the Hang Seng Tech reached its lowest in the same month last year.

On Wednesday, Xiaomi added 0.6 per cent to HK$25.75 after the Chinese smartphone maker said it will invest billions to make electric vehicles, joining a crowded field of players in the world’s biggest auto market.

Bairong dropped 16 per cent from its initial public offering price to HK$26.70 on the fintech company’s first day of trading in Hong Kong.

On the mainland, two debutants on Shanghai’s technology Star Market got off with a strong start. Anhui Yuanchen Environmental Protection Science and Technology jumped 161 per cent from the offer price to 16.95 yuan and Xiangyu Medical climbed 55 per cent to 44.80 yuan.

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