Hong Kong stocks kick off new year of trading with worst start since 2019

Hang Seng Index closes 2.2 per cent lower to start the year; on the first day of trading in 2019, it fell 2.8 per cent

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A man passed through Hong Kong’s Central district. Photo: Nora Tam

Published: 10:37am, 2 Jan 2025Updated: 4:30pm, 2 Jan 2025

Hong Kong stocks had their worst start to a year since 2019, as investors remained wary about China’s growth outlook and the global economic landscape weeks before president-elect Donald Trump returns to the White House.

The Hang Seng Index fell 2.2 per cent to 19,623.32 at the close. On the first day of trading in 2019, the benchmark retreated 2.8 per cent. The Hang Seng Tech Index dropped 2.5 per cent. On the mainland, the CSI 300 Index slid 2.9 per cent, its worst trading start since 2016 when it tumbled 7 per cent, while the Shanghai Composite Index retreated 2.7 per cent.

Xinyi Solar Holdings slumped after issuing a profit warning. Industrial and Commercial Bank of China (ICBC) and China Construction Bank lost at least 3 per cent as the two stocks traded without an entitlement to dividend payouts. Alibaba Group Holding fell after selling its stake in a retailer at a loss.

The Caixin manufacturing purchasing managers’ index, a gauge of mostly smaller companies, fell to 50.5 in December from 51.5 a month earlier, according to a statement released by Caixin and S&P Global on Thursday. While the reading was above 50, indicating an expansion of activity, the figure fell short of the median forecast of 51.7 from economists tracked by Bloomberg.

Adding to the subdued mood is a shift in sentiment for US stocks, which ended 2024 with four consecutive days of declines. Investors have switched focus to the impact of potential tariffs and inflation-stoking policies from the incoming Trump administration from their initial excitement over fiscal support and tax cuts, according to analysts. The Federal Reserve has tempered expectations for monetary loosening, with the dot plot pencilling in only two rate cuts for this year.

“The pattern of rangebound trading is expected to continue,” Bocom International said in a report on Thursday. “A breakout will depend on whether China’s economic fundamentals will improve in a sustainable way and how the pace of rate cuts overseas will be.”