Hang Seng Index suffers afternoon slump amid tech and auto stock declines

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AI generated image for illustration purpose only.

5th March 2024 – (Hong Kong) The Hang Seng Index witnessed a marked downturn in the afternoon trading session, with a drop of over 500 points, or 3%, at one point, touching a low of 16,595 points. The index later pared losses slightly, closing down 427 points, or 2.57%, at 16,168 points. The Hang Seng Tech Index fared worse, shedding 143 points, or 4.12%, to stand at 3,331 points. By 3.31pm, the index had edged down further to 16,150.38, a 2.68% decline on the day.

Tech giants were the primary drag on the market, with JD.com leading the descent, tumbling nearly 7% ahead of its earnings report. The vehicular sector continued its downward trajectory, with Li Auto dropping 4%, Geely Automobile by 3%, and BYD Company by 1%.

The morning session commenced under pressure as investors reacted to mainland China’s economic growth targets for the year. The Hang Seng Index opened down by 252 points, or 1.52%, and further plunged to 16,183 at its nadir, ending the morning at 16,272 points, down by 323 points or 1.94%. The H-share Index also saw a decline, dropping 104 points or 1.83%, to 5,608 points. The Hang Seng Tech Index finished the morning session down by 110 points or 3.18%, at 3,364 points, with a turnover of 63.2 billion Hong Kong dollars.

Leading tech stocks continued to weigh heavy on the market. Meituan, which had previously outperformed, gave up 3.99%; Xiaomi Corp. fell by 3.6%; Alibaba Group by 3.19%; and Tencent Holdings by over 2%. JD.com Group, which is set to release its financial results today, saw its share price plummet by 5.92%, marking it as the worst performer among blue-chips, while its affiliate JD Health also experienced a near 5% drop.

Financial stocks broadly trended downward, with HSBC Holdings falling 0.74%, China Ping An by 1.15%, Industrial and Commercial Bank of China by 0.49%, China Construction Bank by 0.61%, and Hong Kong Exchanges and Clearing Limited by 2.25%.

Automotive stocks continued their decline with Li Auto down 3.87%, Xpeng Motors by 1.75%, and NIO by 3.59%. BYD Company, however, bucked the trend with a slight rise of 0.41%.

China’s economic growth forecast for the year is around 5%. Veteran stock commentator  Thomas Chan Ping-keung noted that, given the relatively low base of the previous year, achieving this year’s growth target should not be overly challenging. However, there remains scepticism about the stimulus for corporate earnings, suggesting that the news may have limited impact on the Hong Kong stock market. With strong performances in U.S. and Japanese markets potentially diverting capital, the outlook for Hong Kong stocks could be constrained without significant economic stimulus from mainland policy measures, including monetary or fiscal interventions.