Hong Kong stocks retreated after the market reopened following a holiday, as the fiscal stimulus unveiled by China’s finance ministry undershot investor expectations.
The Hang Seng Index fell 0.4 per cent to 21,184.93 at the noon break. The Hang Seng Tech Index tumbled 1.6 per cent. Hong Kong’s market was shut for a public holiday on Friday. Mainland benchmarks fared better: the CSI 300 Index climbed 1.5 per cent and the Shanghai Composite Index added 1.6 per cent.
Around 50 stocks that are part of the 82-member Hang Seng Index headed south, with Anta Sports Products and Chow Tai Fook Jewellery Group leading the declines.
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At a weekend news conference that was closely monitored by investors, finance minister Lan Fo’an said China would conduct a debt swap programme to help lessen local-government risks. He also said those local governments can issue bonds to buy unsold homes to stabilise the property market and sovereign bonds would be sold to capitalise state-owned banks. Lan also hinted at more fiscal support for the economy, saying that the nation has more room to raise the budget deficit, though he wasn’t more specific on that point.
“There was no dollar figure, timeline, or clear road map. Investors are left in limbo, waiting for more clarity, likely until the next meeting of China’s legislature,” said Stephen Innes, managing director at SPI Asset Management in Bangkok. “The lack of specifics over the weekend feels like a classic case of Beijing kicking the can down the road, and with a deflationary mindset creeping into consumer behaviour, that’s a recipe for disaster.”
China’s deflationary trend also weighed on sentiment. Consumer inflation decelerated to 0.4 per cent in September from 0.6 per cent for the previous month, while producer prices fell 2.8 per cent for a 24th straight month, the statistics bureau said on Sunday.
To sustain the bull run in Chinese and Hong Kong stocks that has added US$4.4 trillion in market value over the past three weeks, Beijing would need to roll out fiscal stimulus worth 3 trillion yuan (US$424 billion) to revive growth and boost consumption, according to Daiwa and Nomura.
Details on fiscal support measures are still scant after the easing programme unveiled by the central bank last month, which included lower borrowing costs and an 800 billion yuan funding plan for stock purchases.
Sportswear maker Anta tumbled 8.9 per cent to HK$91.15 and jeweller Chow Tai Fook slumped 5.8 per cent to HK$7.09. Alibaba Group Holding lost 0.3 per cent to HK$105.50 and Tencent Holdings shed 0.4 per cent to HK$437.
China International Capital Corp sank 4.4 per cent to HK$14.02 after China’s securities regulator said it was investigating the investment bank over a failure to perform due diligence in its capacity as a sponsor of a local chip company’s new share listing in 2021. The stock slumped by the exchange-imposed 10 per cent daily limit to 35.99 yuan in Shanghai.
Other major Asia-Pacific markets rose. South Korea’s Kospi gained 1 per cent and Australia’s S&P/ASX 200 rose 0.5 per cent, while Taiwan’s Taiex added 0.4 per cent. Japan’s market is closed for a holiday.
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