Hong Kong stock futures slide after Beijing unveils plan for local government debt

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In the regular session, the Hang Seng Index declined 1.1 per cent, but things went south after the close

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People walking past by an electronic board showing the Shanghai stock market outside a brokerage in Beijing on November 6, 2024. Photo: AP

Aileen Chuang

Published: 10:23am, 8 Nov 2024Updated: 10:42pm, 8 Nov 2024

Hong Kong shares fell on Friday, despite another cut in the monetary authority’s key rate, though after the close stock futures slid when Beijing unveiled a plan to support local governments with their hidden debt.

After the market closed, China unveiled an increase in the quota for local special bonds by 6 trillion yuan (US$838.1 billion) over the next three years. Futures fell when the plan was announced by Xu Hongcai, vice-chairman of the National People’s Congress’ financial and economic committee, signalling that investor expectations were not met.

“HSI futures plummeted more than 400 points after 4pm when the NPC press conference commenced,” said Louis Wong, executive director of Phillip Capital Management (Hong Kong). “That may reflect that investors are somehow disappointed with the stimulus-package announcement, which mainly focuses on addressing provincial governments’ hidden debt problems.”

US-listed Chinese stocks were mostly lower in early trading on Friday. Alibaba Group Holding and JD.com were down by more than 4 per cent. Alibaba owns the Post. NetEase fared worse, falling more than 5.5 per cent.

In the regular session, the Hang Seng Index declined 1.1 per cent to 20,728.19, while the Tech Index lost 0.2 per cent. The Shanghai Composite Index fell 0.5 per cent. The CSI 300 Index retreated 1 per cent, paring its rally this week to 5.5 per cent – still the best in five weeks.

Chinese property developers dragged the market lower, with Longfor Group leading losses as it tumbled 5.8 per cent to HK$13.72. China Overseas Land and Investments dropped 3.8 per cent to HK$15.36, and China Resources Land weakened 2.9 per cent to HK$26.75. Online game operator NetEase retreated 5.6 per cent to HK$119.40, while food delivery platform Meituan slumped 4.1 per cent to HK$191.80.

Beijing may hold off on any further actions until details on US President-elect Donald Trump’s tariff plans become clear, said Carlos Casanova, an economist at UBP, a Swiss private bank.