Hong Kong stocks declined after an overnight sell-off in European and US equities, as worries about faltering economic recovery and a resurgence in Covid-19 cases fuelled a flight to safety. China refrained from cutting borrowing costs, denting hopes for an easing.
The Hang Seng Index fell 0.8 per cent to 27,259.25 at the close of Tuesday trading, adding to a 1.8 per cent slide on Monday. The decline has trimmed the benchmark’s gains this year to a mere 0.1 per cent. The CSI 300 gauge of the biggest mainland Chinese stocks fell 0.1 per cent. Ten-year Treasury yield earlier slipped below 1.2 per cent for the first time since February.
Alibaba Health led declines among blue chips, plunging 7.4 per cent to HK$14.28. Country Garden Services fell 3.7 per cent to HK$74.35, while Geely Automobile retreated 3.4 per cent to HK$22.90. HSBC lost 1.6 per cent to HK$42.05, while Standard Chartered slid 2.6 per cent to HK$45.10.
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“Investors are worried that a fresh outbreak could potentially hinder the pace of economic reopening,” said Tai Hui, chief Asia market strategist at JP Morgan Asset Management. “The next one to two months will be an important litmus test on governments’ strategy in normalising lives and economic activities.”
The MSCI World Index slipped 1.6 per cent on Monday, the most since May 12, mirroring the losses in Asian markets. Futures on S&P 500 Index gained 0.6 per cent, signalling the US market may recoup some of its 1.6 per cent loss on Monday.
Total confirmed cases of Covid-19 topped 190 million on July 19, including over 4 million deaths, according to the World Health Organization. The highly contagious Delta variant has now spread to over 111 countries, daunting efforts to reopen economies.
Elsewhere, PetroChina dropped 3.6 per cent to HK$3.24, while Sinopec declined 2.7 per cent to HK$3.56 after OPEC+ members agreed to boost crude oil supply from August.
Markets in the Asia Pacific also retreated. Japan’s Nikkei 225 dropped 1 per cent, while South Korea’s Kospi declined 0.4 per cent and Australia’s S&P/ASX 200 slipped 0.5 per cent.
Investors remained downbeat after China’s central bank today kept its key one- and five-year loan prime rates unchanged at 3.85 per cent and 4.65 per cent respectively, amid speculation among traders for an easing to help energise the nation‘s economic rebound.
Some analysts believe this month’s cut in the commercial banks’ reserve-requirement ratio did not go far enough, after reports showing the economy lost growth momentum last quarter.
China Construction Bank fell 1.3 per cent to HK$5.46 and Bank of Communications dropped 1.7 per cent to HK$4.53 in Hong Kong. In the mainland, Ping An Insurance fell 1.5 per cent to 58.46 yuan, while China Merchants Bank declined 1.8 per cent to 49.91 yuan.
Additional reporting by Zhang Shidong
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