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Hong Kong stocks drop on jitters over Covid-19 outbreaks, Sichuan power crisis despite China rate cuts

  • The Hang Seng Index fell to its lowest in almost two weeks despite China banks cutting their prime and mortgage lending rates
  • Covid-19 infections surged to a three-month high over the weekend, while severe power shortages in Sichuan province roiled supply chains

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A person watches an electronic board displaying the stock index and prices at a securities brokerage in Beijing on May 6, 2019. Photo: EPA-EFE
Cheryl Heng
Hong Kong stocks fell to its lowest in almost two weeks despite Chinese banks cutting their key lending rates, amid concerns about the impact on the economy of worsening Covid-19 outbreaks and a looming energy crisis.
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The Hang Seng Index lost 0.6 per cent to 19,656.98 at the close of Monday trading, after gaining about 0.3 per cent earlier. The benchmark retreated 2 per cent last week. The Tech Index fell 1 per cent, while the Shanghai Composite Index added 0.6 per cent.

Tencent fell 1.4 per cent to HK$310.60 and HSBC lost 2.1 per cent to HK$49.30. ENN Energy tumbled 14 per cent to HK$103.50, while Geely Automobile and BYD slipped 0.5 to 1 per cent.

Covid-19 cases in China jumped to a three-month high over the weekend. The country is also experiencing its worst heatwave in six decades, as authorities in the manufacturing hub of Sichuan warned of severe power shortages on Sunday.

“With Covid restrictions hitting popular China tourist resorts, a politburo in flux running into the Chinese Communist Party’s 20th Party Congress later this year and a real estate sector undergoing critical rehabilitation, a black swan event has occurred with a record two-month-long heatwave,” said Sean Darby, global equity strategist at Jefferies, in a note published on Monday.

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