Hong Kong stocks hit 6-week low, erasing most of 26% stimulus rally

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The Hang Seng Index has surrendered most of the 26.5 per cent rally driven by Beijing’s stimulus blitz on November 24

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People walk past screens showing stock prices outside the Exchange Square in Central, Hong Kong in October 2024. AP Photo

Zhang Shidongin Shanghai

Published: 10:50am, 8 Jan 2025Updated: 4:31pm, 8 Jan 2025

Hong Kong stocks fell for a third day to a six-week low on concerns a robust US labour market will restrain the Federal Reserve from more interest-rate cuts this year, while China struggles to end sticky deflation in the economy.

The Hang Seng Index slipped 0.9 per cent to 19,279.84 on Wednesday, a level not seen since November 26. The benchmark has surrendered most of the 26 per cent rally driven by Beijing’s stimulus blitz on September 24. The Tech Index tumbled 1.1 per cent while the Shanghai Composite Index rose less than 0.1 per cent.

Smartphone and car maker Xiaomi slumped 4 per cent to HK$32.80 and China Shenhua Energy fell 2.8 per cent to HK$31.45, while Techtronic sank 4.7 per cent to HK$96.80. Tencent tumbled 2.7 per cent to HK$369.20, adding to a 7.3 per cent loss on Tuesday after being designated with dozens of firms as “Chinese military companies operating in the US.”

A US government report on Tuesday showed job openings unexpectedly rose in November to a six-month high while hiring softened, suggesting America’s labour market conditions would not pressure the Fed to cut rates by as many times as predicted by Wall Street economists for this year.

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Citing China, Trump won’t rule out using military to reclaim Panama Canal and buying Greenland

“Stocks are now under pressure because of waning expectations about Fed rate cuts,” said Yan Zhaojun, an analyst at Zhongtai Securities. “The market is also being held back by weak corporate earnings and the uncertainty of the size of China’s incremental fiscal stimulus.”