Hong Kong stocks cap longest losing streak in 2 months on China stimulus letdown
Investors have started to ‘lose confidence and patience’ as they wait for China to enact ‘whatever it takes’ measures, analyst says
The Hang Seng Index fell 0.1 per cent to 19,823.45 at the close, capping a 5.4 per cent loss in the four-day run. The Hang Seng Tech Index slipped less than 0.1 per cent.
China benchmarks bucked the trend. The CSI 300 Index climbed 0.6 per cent, and the Shanghai Composite Index added 0.5 per cent.
Biopharmaceutical firm Wuxi AppTec and affiliate Wuxi Biology led the pack of decliners. Investors are also gearing up for a slew of earnings releases by bellwether companies Tencent Holdings and Meituan this week.
The Hang Seng Index closed below the 20,000-point mark for the first time since September 26 on Tuesday as investors shifted to a defensive mode after the disappointing outcome of China’s legislative meeting last week. The legislature’s standing committee only approved bond issuances to address local-debt issues, deflating expectations of measures to boost consumption and the employment rate.
“The current weakness seen in the Hong Kong stock market has been attributed to the lack of details of the promised fiscal stimulus measures from China to negate the ongoing deflationary spiral,” said Kelvin Wong, an analyst at Oanda. “Financial market participants have started to lose confidence, and patience in the timing and willingness of China’s top policymakers to enact ‘whatever it takes’ bazooka-like fiscal stimulus measures to jump-start consumer confidence and spending.”
A breach of the 19,700 level, a key medium-term support for the Hang Seng Index, will probably take the benchmark down to around 17,900, where its 200-day moving average stands now, according to Wong.
