Hong Kong’s Hang Seng down 6% after China Congress
Shanghai, China, Oct 24 (EFE).- The Hong Kong Stock Exchange fell sharply on Monday with losses of 6.36% following the Chinese Communist Party congress over the weekend, where Xi Jinping secured an unprecedented third term as party leader and shook up the cabinet to instate loyalists.
The Hang Seng index already ended last week at a 13-year low, and on Monday slumped to the lowest levels since 2009 when the world’s markets collapsed amid the global financial crisis.
On Monday, the Hang Seng index slid to 6.36%, or 1,030.43 points, to 15,180.69,
All sectoral indices closed negative: commerce and industry (-7.99%), real estate (-5.43%), finance (-4.59%) and services (-0.82%).
The Hang Seng China Enterprises, a gauge of Chinese stocks listed in Hong Kong, plunged by 5.4%, while the one that monitors technology firms, the Hang Seng Tech Index, dropped to 9.65%.
MARKETS WARY OF XI’S POWER
A Goldman Sachs report published on Sunday warned of a lack of recognized market-oriented economic reformers among Beijing’s leadership which could affect the risk premium of China offshore equities that “could stay elevated in the short run.”
After obtaining an unprecedented third term on Sunday, Xi cemented his power and introduced a new committee of loyalists and the reshuffle of other CCP members with more pragmatic and market-oriented views like prime minister Li Keqiang, who will step down in March.
It would seem that not even the optimistic data published Monday appeased investor concerns where GDP for the third quarter exceeded analysts’ expectations by rebounding 3.9% compared to the previous quarter.
Only 6 of the 73 listed companies on the Hang Seng evaded losses on Monday with banking giant HSBC (+1.32%) and infrastructure conglomerate CK Infrastructure Holdings (+ 4.12%) managing to escape unscathed.
DIGITAL SECTOR PLUNGES
A notable downward trend among at least a dozen tech firms that recorded losses of more than 10%, saw Tencent and Alibaba plummet 11.43% and 11.42%, respectively, surpassed by other heavyweights in the sector such as Baidu (-12.2%), JD.com (-13.17%) and Meituan (-14.83%), as well as by the real estate company Longfor Group (-15.08%).
The digital sector has been at loggerheads with the Communist Party since November 2020, when Beijing pulled the plug on the initial public offering of Alibaba’s ‘fintech’, Ant Group, which was set to be the largest in history but has instead resulted in millions in fines and official investigations.
Despite rumors suggesting the government’s targeting of digital firms could be eased, Xi pledged during the congress to keep the accumulation of wealth “well-regulated” and “adjust excessive income”, which some investors interpret as an increase in scrutiny of private capital.EFE
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