Concerns about China’s deteriorating growth prospects dragged Hong Kong stocks to their lowest level in three months, while investors refrained from fresh bets before a US jobs report that could sway the Federal Reserve’s interest-rate policy.
The Hang Seng Index fell 1.5%, while the Hang Seng Tech Index dropped by 1.7%.
In terms of star stocks, Alibaba fell 3%; Xiaomi, XPeng, SMIC, JD.com, Li Auto, Baidu fell 2%; Tencent, Meituan, Nio fell 1%.
The risk-on mood waned as investors feared China’s economic slowdown would deepen after key economic data showed a deceleration across the board in November. Retail growth weakened to the slowest pace since the Covid-19 pandemic, while fixed-asset investment continued to contract and a decline in home prices showed no signs of abating.
Investors also stayed on the sidelines ahead of a November report on the US labour market due later on Tuesday, which would include a reading for October that was delayed by the longest-ever government shutdown. A strong reading would reduce the chances of monetary easing and could fuel anxiety over the stretched valuations of technology stocks among traders.
“There’s no fresh catalyst and the uncertainty over a Fed rate cut next year has had some impact on liquidity,” said Melody Lai, an analyst at SPDB International in Hong Kong. “Sentiment will swing wildly as stocks move into a consolidation stage. It’s not the time to buy the dip yet.”
China’s growth would probably slump to 4.1 per cent in the first half of 2026 before rebounding in the second half, with Beijing expected to roll out stimulus measures early next year, according to Lu Ting, chief China economist at Nomura Holdings.
Beijing might cut the benchmark interest rate by 10 basis points and the reserve requirement ratio by half a percentage point in the second quarter, while local governments would be urged to use all means necessary to stabilise growth, he said.
China has so far refrained from introducing an immediate stimulus plan as its economy grew by 5.2 per cent in the first nine months, putting the annual growth target of around 5 per cent within reach.
Meanwhile, Chinese stocks would be rangebound in the near term amid a lack of upwards earnings revision and slowing retail fund inflows, according to Value Partners.
“As valuation is not cheap and amid a weak macroeconomic environment, investors continue to focus on sectors with higher earnings visibility and growth potential, such as AI and tech, while interest in the consumption sector remains weak,” said Kelly Chung, chief investment officer for multi-assets at the Hong Kong-based asset management firm.
Comments