Alibaba and JD.com lead HK tech rout

Hong Kong stocks slumped by the most in more than seven weeks as the threat of global inflation and speedy interest rate increases prompted traders to dump riskier assets, with US equities suffering a US$2.4 trillion rout on Thursday.

The Hang Seng Index slid by 3.8 per cent to 20,001.96 points yesterday, the most since the March 15 crash, while the Hang Seng Tech Index lost 5.2 per cent in the biggest sell-off in four weeks.

On the mainland, the Shanghai Composite Index and the Shenzhen Component Index both declined by more than 1.7 per cent amid dimming growth outlook.

Alibaba Group Holding, owner of the Post, dropped by 6.6 per cent to HK$90.35. Meituan sank by 4.7 per cent to HK$157 and Tencent Holdings retreated by 4.7 per cent to HK$349.20, while JD.com slipped by 6.2 per cent to HK$226.60.

Country Garden Holdings lost 9.5 per cent to HK$4.86, leading a broader 3.6 per cent slide in the Hang Seng Properties Index.

The drop extended losses in the Hang Seng Index to 14 per cent this year, wiping out more than US$327 billion of market value. A further US$3 trillion was erased from the Shanghai and Shenzhen bourses amid the mounting toll from lockdowns under the government’s zeroCovid policy.

“This is a major bear market,” said Clifford Bennett, chief economist at ACY Securities in Sydney. “The US economy is in diabolical shape, Europe is at war. And Shanghai, the world’s biggest port, is in extended lockdown. This is truly catastrophic.”

The S&P 500 Index sank by 3.6 per cent to erase US$1.3 trillion of market value. It was the fifth time the market has sold off more than 3.5 per cent since the pandemic began in March 2020, according to Bloomberg data.

The Nasdaq Composite Index plunged by 5 per cent, lopping US$1.1 trillion of value.

Beijing on Thursday reaffirmed its stance on zero-Covid policy, saying it would stand the test of time. President Xi Jinping has pledged to fight any attempt to “distort, question and challenge” its policies, even as reports this week showed a slide in Chinese manufacturing and services indicators amid lockdowns.

In Shanghai, pandemic curbs remained intact as the commercial hub continued to see new cases, officials said yesterday, delaying a resumption in production activity and clouding the outlook for corporate earnings.

The Hang Seng Index’s 5.2 per cent loss for the week is the most since the March 11 week. The rout reflects underlying jitters as stocks showed wild swings. Investors cheered the Federal Reserve’s 50-basis-point rise on Wednesday, only to head for the exit in the next 24 hours.

The Hong Kong Monetary Authority raised its base rate in lockstep to 1.25 per cent, with policymakers cautioning consumers about mortgage borrowing costs. The local economy faces recession risks after contracting deeper than expected last quarter amid measures to curb the fifth wave of infections.

Global growth stocks faced “earnings downgrades”, Minsheng Securities said in a report yesterday. “Inflation may enter the second stage of acceleration and China’s domestic inflation may be ignited at any time.”

Bestlink Technologies, an information and communication technology service provider based in Nanjing in Jiangsu province, surged by 44 per cent to 20.92 yuan in its Shenzhen trading debut.

Elsewhere in trading yesterday, South Korean and Australian stocks retreated by 1.2 per cent and 2.2 per cent, respectively, while the Japanese market gained by 0.7 per cent.