Home Markets Hong Kong stocks retreat but market-stabilising measures awaited at China’s ‘two sessions’, property shares cheered by sales bump

Hong Kong stocks retreat but market-stabilising measures awaited at China’s ‘two sessions’, property shares cheered by sales bump

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Hong Kong stocks weakened, giving up initial gains posted ahead of China’s annual legislative meeting where traders expect announcements to stabilise markets and shore up the world’s second largest economy. Li Auto and BYD tumbled as the price war in the electric vehicle (EV) market intensified.

The Hang Seng Index lost 0.1 per cent to 16,578.95 as of local noon trading break, after rising as much as 0.3 per cent earlier in the session. The Tech Index lost 0.4 per cent while the Shanghai Composite Index added 0.2 per cent.

Tencent lost 0.3 per cent to HK$276.60, Alibaba weakened 1.1 per cent to HK$72.25 while online travel agency Trip.com dropped 3 per cent to HK$344.60. EV maker Li Auto tumbled 12.9 per cent to HK$156.10 after sales declined for a second month amid the escalating price wars in China’s crowded EV marker. Rivals BYD declined 1.7 per cent to HK$191.30.
The National People’s Congress (NPC), the country’s annual legislative session that sets budgets and outlines the leadership’s plans for the economy, will kick off on Tuesday in Beijing. Traders are now waiting for more clues as to whether the recent market rebound will be sustained and how the government plans to tackle the property market’s woes. There are wide expectations of financing and fiscal reforms as well.

Policymakers are likely to set a growth target of “around 5 per cent” for the economy, an official on-budget deficit of 3 per cent, and approve the issue of 1 trillion yuan Central Government Special Bonds to boost the economy, according to Goldman Sachs.

“The market may maintain its volatility under the backdrop of policy speculation during ‘two sessions’,” Dai Qing, analyst at Changjiang Securities, said in a note on Monday. Failing to meet the expectations might lead to increased uncertainty and dampen market sentiment, he added.

The Hang Seng Index climbed 6.6 per cent in February, the benchmark’s best month since January 2022 after Beijing rolled out a slew of market-boosting measures, ranging from state buying to curbs on quantitative trading. Global investors resumed buying Chinese stocks in February after an unprecedented six months of outflows, suggesting Beijing has had some success in restoring investors’ confidence.
Limiting losses, Baidu jumped 1.5 per cent to HK$102.70, Meituan surged 4 per cent to HK$91.90 and gaming giant NetEase added 1.3 per cent to HK$175. Henderson Land gained 0.7 per cent to HK$22.55 and Sun Hung Kai Properties climbed 1.2 per cent to HK$80.40 amid signs homebuyers are returning to the market. Drug maker Wuxi Biologics surged 11.4 per cent to HK$20.95 while Wuxi Apptech jumped 11.8 per cent to HK$56.20.

‘Worst is over’ for Hong Kong property even though sales dropped in February: analysts

More data out later this week is likely to show China’s economy is on the mend. The Caixin PMI Services Index, due Tuesday, is expected to rise to 52.9 from 52.7 in January. Consumer price data due Friday is likely to snap the four straight months of deflation while showing a rise of 0.2 per cent, according to economist estimates polled by Bloomberg.

Elsewhere, Shenzhen Stock Exchange added 22 stocks, including Shimao and Evergrande Property Services into the list of securities eligible for southbound trading. Meanwhile 27 stocks including China Huarong and Gome Retail were removed.

Other key Asian markets were broadly higher. Japan’s Nikkei 225 climbed 0.6 per cent to breach the 40,000 level for the first time as foreign investors continue to snap up local shares amid the country’s ultra-loose monetary policy and corporate governance reforms. South Korea’s Kospi Index jumped 1.2 per cent while Australia’s S&P/ASX 200 declined 0.2 per cent.

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