Hong Kong stocks fall by most in month after China’s economic policy meeting underwhelms

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Statement from China economic conference devoid of concrete details about what stimulus measures government would take next year

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Zhang Shidongin Shanghai

Published: 10:14am, 13 Dec 2024Updated: 4:41pm, 13 Dec 2024

Hong Kong stocks staged their largest drop in a month, driving the benchmark below the 20,000-point mark, after a readout from a key Chinese economic policy meeting failed to satisfy investors.

The Hang Seng Index fell 2.1 per cent to 19,971.24 at the close, the steepest decline since November 12. The decline trimmed the gain for the week to 0.5 per cent. The Hang Seng Tech Index retreated 2.6 per cent. On the mainland, the CSI 300 Index slid 2.4 per cent and the Shanghai Composite Index sank 2 per cent.

All but six stocks from the 83-member Hang Seng Index dropped; Chinese property developers were the worst performers.

China’s bond market extended its relentless run-up after a readout from the annual economic work conference, which was published by the Xinhua News Agency on Thursday night, said Beijing would make more cuts to interest rates and the reserve requirement ratio for banks next year. The yield on the 10-year sovereign bond hit a record low again, falling to 1.773 per cent.

At the two-day gathering, top officials largely repeated the language used after a Politburo meeting earlier this week, pledging to use looser monetary tools, raise the deficit ratio and stabilise home prices in 2025. Traders viewed the readout as devoid of concrete details about what stimulus measures the government would take to revive growth next year.

“Long-term sustainability hinges on policy details and execution,” said Laura Wang, a strategist at Morgan Stanley in Hong Kong. “We advise investors to exercise caution until clarity emerges on policy follow-through and to monitor the following potential developments and signposts [including earnings forecast cuts, the yuan’s depreciation and the China-US tension.]”