Hong Kong’s Index Drops 2% As Tech Stocks Under Pressure

On Friday, the Hang Seng index in Hong Kong recorded declines of more than 2%, as tech stocks were weighed down.

Hong Kong markets

There was a 2.64% decline in Hong Kong’s benchmark index in the final hour of trading, while a 5.41% drop was recorded in the Hang Seng Tech index.

Heavyweights of the Hang Seng index Meituan and Alibaba recorded declines of 7.18% and 7.01%, respectively.

Alibaba is on course for a third consecutive session of losses, after news that a number of executives of the Ant Group were no longer Alibaba partners.

As for the decline in Meituan, it was after the market regulator in Hangzhou summoned the company over price competition and food safety.

There was a gain of more than 2% in Standard Chartered shares initially, after a 19% rise in the bank’s profits was reported for the first half of the year.

The bank also announced a share buyback program worth $500 million. But, the stock trimmed its gains later, even though it did end the session up by 0.72% in afternoon trading

Friday also saw a decline in Hong Kong’s real estate stocks.

Chinese markets

On Thursday, Chinese leaders had signaled that it was unlikely for Beijing to try to give the economy a boost and downplayed the GDP target of the country to be around 5.5%.

Market analysts said that this showed that the government was not going to spend a lot on infrastructure projects for achieving its targets, but it was not necessarily a bad thing.

This is because analysts said that this would provide the central government more room for solving the issue of unfinished construction projects.

Mainland Chinese markets saw a 0.89% decline in the Shanghai Composite, which brought it to 3,253.24, while a 1.3% drop in the Shenzhen Component brought it to 12,266.92.

Moreover, Beijing does not appear to back down from its zero-COVID policy. Analysts said that this stance would only change when authorities are convinced that medications/vaccine are effective and mutations become less virulent.

Currency strength

On Friday, there was a sharp strengthening in the Japanese yen against the US dollar, after it had seen weakness for months because of the Bank of Japan’s ultra-loose monetary policy.

Market analysts said that the US rates markets had seen a sharp rally in the second half of the week and this had caused the US dollar to decline and the yen to strengthen.

A negative GDP print for the US saw Treasury yields fall. The yen was trading against the dollar at 132.81.

There was also a rise in the risk-sensitive Australian dollar against the greenback, as it was trading at $0.7022.

Market analysts said that global risk sentiment had improved in the last two days and the weakness in the US dollar had given the Aussie a boost.

The US dollar index that measures the currency against six of its major peers was trading at 105.625. Australia’s S&P/ASX 200 index rose by 0.81% to end the day at 6,945.2.

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