Hong Kong stock losses extend to 3 days as investors await stimulus details

Chinese developers surge in advance of housing ministry briefing, while Hong Kong property stocks rise on policy to raise borrowing limit

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People sit in front of Exchange Square, the building housing the Hong Kong stock market, on October 8, 2024. Photo: EPA-EFE

Published: 10:19am, 16 Oct 2024Updated: 4:44pm, 16 Oct 2024

Hong Kong stocks dropped for a third day as investors await more clarity on fiscal stimulus from Beijing that is perceived as critical to sustain a 20 per cent gain over the past month.

The Hang Seng Index slipped 0.2 per cent to 20,286.85 at the close, marking a three-day, 4.5 per cent decline. The Hang Seng Tech Index fell 1.1 per cent. Mainland China’s benchmarks were mixed: the CSI 300 Index slipped 0.6 per cent, taking its decline to 10 per cent from October 8, while the Shanghai Composite Index added 0.1 per cent.

Alibaba Group Holding and Tencent Holdings declined among the biggest constituents on the Hang Seng gauge. Limiting losses, Henderson Land Development paced gains among Hong Kong developers after Hong Kong Chief Executive John Lee Ka-chiu announced the city will let homebuyers borrow more in his policy address.

Investors are digesting the implications of a briefing over the weekend by mainland China’s finance ministry, which refrained from providing specific numbers on the much-heralded fiscal support. Wall Street firms from Morgan Stanley to Goldman Sachs believe that detailed measures will come through after approval by the legislative body, whose standing committee is set to meet in coming weeks.

“To truly spark a rally, Beijing must show that its monetary stimulus is more than just window dressing, with real economic growth and a multiplier effect kicking in,” said Stephen Innes, managing director with SPI Asset Management in Bangkok. “Without that concrete evidence, investor sentiment – even with support from government-backed financial institutions – will likely stay on edge.”

Sentiment remains skittish, as a bull run that recovered as much as US$4.4 trillion in market value over the past month for the markets in Hong Kong and China shows signs of cooling. Investors are jittery that share prices have moved far ahead of fundamentals and worry that the fiscal stimulus measures may fall short of expectations. Nomura Holdings estimates the stimulus package at more than 3 trillion yuan (US$421.7 billion).

Alibaba dropped 0.9 per cent to HK$98.95, and Tencent lost 0.3 per cent to HK$415.80. E-commerce giant JD.com sank 3.1 per cent to HK$155.40.