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Hong Kong stocks fall on mixed earnings results and prospect of China fiscal stimulus
Investors gear up for National People’s Congress Standing Committee meeting next week
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Zhang Shidongin Shanghai
Hong Kong stocks fell, hitting the brakes on three days of gains, as investors assessed a mixed bag of earnings results as they await a critical legislative meeting in China that could yield fresh fiscal stimulus.
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The Hang Seng Index fell 1.6 per cent to 20,380.64 at the close, erasing all gains from the past three days. The loss was the most substantial since October 21.
China Merchants Bank slid after reporting a lower profit and Haier Smart Home retreated on lower-than-expected earnings, while WH Group rallied after its profit almost doubled. Chinese makers of electric vehicles (EV) retreated after the European Union (EU) pushed ahead with a move to impose higher tariffs on car imports from the mainland.
The Hang Seng Tech Index sank 2.4 per cent. Benchmarks on the mainland were also weak: the CSI 300 Index slid 0.9 per cent and the Shanghai Composite Index shed 0.6 per cent.
Investors are gearing up for the National People’s Congress Standing Committee meeting next week. Traders have set a high bar for its outcome, as the more than 20 per cent gains in China and Hong Kong markets since late September have priced in the prospect of fiscal support for the economy. For the rally to be sustainable, legislators would need to approve at least 2 trillion yuan (US$280 billion) of fiscal stimulus, according to top investment banks.
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“The Hong Kong market doesn’t have much upside room now and is most likely to be rangebound, given the uncertainty of the earnings season and the rising US Treasury yields,” said Yan Zhaojun, an analyst at Zhongtai Securities. “Still, the market has hopes of fiscal stimulus, but is a bit conservative on the size and scope.”
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