Hong Kong shares tumbled nearly 3 percent to a two-week low on Monday amid the resurgence of domestic COVID-19 cases, plus growing concerns over tightened antitrust regulations on tech firms.
The benchmark Hang Seng Index closed at 21,124.2, losing 601.58 points or 2.77 percent. The Hang Seng Tech Index shed 3.86 percent
The benchmark Hang Seng Index closed at 21,124.2, losing 601.58 points or 2.77 percent. The Hang Seng Tech Index shed 3.86 percent, with e-commerce giant Alibaba dropping nearly 6 percent and the internet bellwether Tencent plunging 2.89 percent.
The selloff of tech stocks came after the country’s antitrust regulator State Administration for Market Regulation imposed fines on several companies including the two heavyweights for not complying with anti-monopoly rules on reporting past deals.
COVID concerns nevertheless remain as Shanghai detected a new highly-contagious omicron subvariant. Casino stocks also slipped on Monday in the fallout as Macao started to shut nearly all commercial and industrial businesses including casinos for a week with the aim of halting the spread of COVID outbreaks.
Andrew Wong Wai-hong, the chairman and chief executive of Anli Securities, said the capital market was at low ebb on Monday as concerns about the reintroduction of stringent social-distancing rules and heightened market regulations grow. “These were the same reasons for the plummet over the past two years,” he added.
The Chinese mainland’s stocks also ended lower. The benchmark Shanghai Composite Index lost 1.27 percent, while the Shenzhen Component Index shed 1.87 percent. Meanwhile, the CSI 300 index — which tracks the largest Shanghai- and Shenzhen-listed stocks — fell 1.67 percent.
“It is not a surprise to see market volatility as investors are used to taking a wait-and-see attitude in these uncertain times,” said Wong. “But this does not mean there’s limited room for growth in the long term, especially for those giant companies.”
Still, Linus Yip, the chief strategist at First Shanghai Group, was quick to dismiss lingering worries about the market’s long-term prospects. “Hong Kong’s stock market boasts advantages of valuation,” said Yip, adding that the Hang Seng Index’s price-earnings ratio, a common denominator for valuing a stock or index – is now around 10, far lower than that of the US market.
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“The latest selloff sentiment was mainly triggered by bearish news and will linger for a foreseeable time, for sure,” he said. “But with proven fundamentals of quality listed companies against the backdrop of a promising economic recovery, the market is poised to regain momentum in the long term.”