Hong Kong stocks fall for a second day, erasing all gains made last week

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Sentiment among traders has been in the doldrums since late last week and gains made from a brief rebound have been erased

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People passed through Exchange Square in Central. Photo: May Tse

Yulu Ao

Published: 10:33am, 17 Dec 2024Updated: 4:18pm, 17 Dec 2024

Hong Kong stocks retreated for the second day in a row, erasing all last week’s gains, as investors remained dispirited about Beijing’s signalling on support measures for the world’s second-largest economy.

Traders are gearing up for this week’s meeting of the US Federal Reserve, which is widely expected to cut its benchmark rate by a quarter point in spite of a recent inflation uptick. The central bank is also expected to signal a slower path of future cuts due to uncertainty about the incoming Trump administration’s economic proposals.

The Hang Seng Index declined 0.2 per cent to 19,751.81 at the close on Tuesday. The Hang Seng Tech Index fell 0.5 per cent. On the mainland, the CSI 300 Index added 0.3 per cent, while the Shanghai Composite Index dropped 0.7 per cent.

In the afternoon session, shares got a short-lived bump after a report said China would increase its budget deficit to 4 per cent of gross domestic product next year, part of plans to counter threats from US tariffs. The Hang Seng rose as much as 0.7 per cent, though it fell again later.

Sentiment among traders has been in the doldrums since late last week and the gains made from a brief rebound have been erased. On Friday, stocks dropped after a readout from a key Chinese economic policy meeting failed to satisfy investors. Officials largely repeated the language used after a Politburo meeting earlier in the week and traders viewed the readout as being devoid of details about what Beijing plans to do to revive growth next year.

“Investors had high hopes for stimulus policies from the annual Central Economic Work Conference, but they were disappointed as no [new] measures were announced,” said Kenny Ng, a strategist at Everbright Securities International. “Sentiment soured further as China’s less-than-expected consumption data demonstrated no improvement despite a slew of supporting measures.”