- Tech stocks retreated as Alibaba surrendered some of its 24 per cent rebound from October low
- Higher energy and metal prices seen hitting power producers and manufacturers, dimming economic recovery outlook
Zhang Shidong
Published: 10:51am, 12 Oct, 2021
Hong Kong stocks retreated from a four-week high as tech leaders from Alibaba Group Holding to Meituan faltered amid concerns surging global energy prices will undermine economic revival efforts.
The Hang Seng Index slid 1.4 per cent to 24,962.59 at the close after reaching the highest level since September 14 on Monday. The Hang Seng Tech Index tumbled 3.2 per cent, giving up all of the advance a day earlier. The Shanghai Composite Index lost 1.3 per cent.
Investors locked up gains from the swift rebound in Chinese tech stocks in recent days as valuations cheapened, underpinned also by expectations that the worst in tech-sector regulatory crackdown is over.
Alibaba, the owner of this newspaper, sank 3.9 per cent to HK$161.30 to surrender some of the 24 per cent surge from an October 5 record low. Meituan and Tencent Holdings lost at least 2.6 per cent. Sunny Optical shed 4.2 per cent to HK$193.20 after saying shipments of handset lenses slumped in September.
“The policy headwind will probably persist longer than expected,” said Guo Yuantao, an analyst at China Merchants Securities. “We are still cautious about the internet, gaming and education sectors, though the valuations are low.”
A surge in energy costs dented sentiment. Crude oil futures traded close to US$80 a barrel, with the global energy crunch disrupting supply and pushing up commodity prices. Aluminium, for example, hit a 13-year high. They added to mounting concerns that higher input costs will hurt profit margins of other industrial companies, such as manufacturers and power producers.
Still, BlackRock, the world’s biggest money manager, is turning “modestly” positive on Chinese stocks, betting that policymakers are likely to counter an economic slowdown by reaching for the stimulus purse and softening a regulatory crackdown on businesses.
Other major markets all headed south on Tuesday, with South Korea’s benchmark falling by the most with a 1.4 per cent setback. US equities also sank overnight on jitters about high energy costs.
Elsewhere, the city may be facing a shutdown due to extreme weather in the coming days. The Hong Kong Observatory said the city’s residents should prepare for a gale or No 8 later Tuesday as Severe Tropical Storm Kompasu edges closer to the city.
A slew of data this week on China’s economic health for September is expected to keep the market on cautious mode. Factory-gate prices probably accelerated last month, according to the estimates of economists surveyed by Bloomberg before a report on Thursday.