Fri, 09 Dec 2022

Hong Kong stocks stumble to lowest since 2011

ANI
25 Sep 2022, 23:18 GMT+10

Hong Kong, September 25 (ANI): Hong Kong stocks sank to the lowest since 2011 as the increased rate dented market confidence and heightened the worries of the looming recession.

Jiaxing Li, writing in The Star said that the concerns over more interest-rate increases by global central banks would crush consumption, damage corporate earnings and push the global economy into a recession.

The Hang Seng Index sank 2 per cent to 18,089.77 at 3.18 pm local time, a level not seen since December 2011, following a 0.6 to 1.6 per cent drop in equity markets across Asia-Pacific.

The Tech Index lost 2.4 per cent while the Shanghai Composite Index declined 0.3 per cent. 62 of the 73 Hang Seng index members fell, as did all members of the finance and utilities sub-indices, reported The Star.

The Hong Kong stock market has lost USD 1.2 trillion of market capitalisation this year before today, while the benchmark index lost more than 21 per cent.

Alibaba Group tumbled 3.4 per cent to HKD 80.20, the lowest since mid-March, while Tencent Holdings retreated 1.5 per cent to HKD 281.80, a four-year low.

JD.com, Baidu and Lenovo Group lost 2.6 to 3.6 per cent, and Macau casino operators Sands China and Galaxy both declined by at least 2.5 per cent, said Jiaxing.

The Hong Kong Monetary Authority lifted its base rate by 75 basis points to 3.5 per cent with immediate effect on Thursday, in lockstep with the same increase by the Federal Reserve.

That brought the cost of money in the local market to the highest level since the global financial crisis in 2008.

"We expect equity markets to continue to remain under pressure with tighter policy," said Ray Sharma-Ong, investment director for multi-asset solutions at abrdn, a UK-based money manager.

"Higher restrictive rates, slows demand and results in demand destruction, causing corporate earnings growth to decline."The Fed raised its target interest-rate range to between 3 and 3.25 per cent late Wednesday, warned of more pain ahead and pledged to "keep at it" on policy tightening to bring its target inflation to 2 per cent or slower. US prices rose at an annual rate of 8.3 per cent in August, near the highest in four decades, reported The Star.

The losses are in tandem with regional market declines after the SP 500 Index retreated 1.7 per cent in overnight trading as the hawkish Fed surprised economists banking on guidance for an earlier easing path. That will not come before 2024, said Christian Scherrmann, an economist at DWS Group. (ANI)

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