Hong Kong stocks extend weekly loss as investors wait for China stimulus, earnings

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The Hang Seng Index fell 1.6 per cent to 20,478.46 at the close, adding to a 2.1 per cent decline over the past week

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Stock information displays outside Exchange Square, the home of the Hong Kong stock exchange, on October 8, 2024. Photo: Eugene Lee

Zhang Shidongin Shanghai

Published: 10:21am, 21 Oct 2024Updated: 4:25pm, 21 Oct 2024

Hong Kong stocks dropped, extending a decline last week, as investors await more stimulus measures from Beijing and a raft of corporate results due this week.

The Hang Seng Index fell 1.6 per cent to 20,478.46 at the close, adding to a 2.1 per cent decline over the past week. The Hang Seng Tech Index lost 2.4 per cent. Macau casino operator Sands China and Ping An Insurance Group declined before their quarterly results announcements later on Monday.

Mainland benchmarks advanced: the CSI 300 Index gained 0.3 per cent and the Shanghai Composite Index climbed 0.2 per cent. Some 23 listed companies including China Petroleum and Chemical Corp will pour a combined 11 billion yuan (US$1.55 billion) into stock buy-backs and stake increases, becoming the first companies to receive funds through a relending programme aimed at shoring up equities.

Investors were unimpressed by a quarter-percentage-point cut in the loan prime rate (LPR) in both the one-year and five-year terms on Monday, as the reduction largely fell in line with a comment on lowering borrowing costs by central bank governor Pan Gongsheng at a financial forum on Friday.

All eyes will be on the actions of the standing committee of the legislative National People’s Congress in coming weeks for fiscal stimulus. The legislature is widely expected to approve an increase in government spending and to raise the quota on government bond issuances. The bull run that has driven stocks in Hong Kong and China up by more than 20 per cent since the end of September has slowed recently, as traders wait for more signals from Beijing to rejuvenate growth.

“China’s economy is still fragile, and turning the ship around will take more than a few rate cuts or short-term liquidity injections,” said Stephen Innes, managing director with SPI Asset Management in Bangkok. “The pressure on Beijing to deliver bolder fiscal reforms and more substantial stimulus measures is intensifying, but whether they will answer that call with the force needed remains to be seen.”