Hong Kong Indexes Plunged 4% as Market Rally Ran Out of Steam

Li Chen
03 Oct, 2024
Hong Kong

Hong Kong market indexes declined for the first time in seven days after investors turned cautious. 

Benchmark indexes in Hong Kong declined as much as 4% and halted a 6-day rally that saw indexes soar more than 23%. 

Financial markets in mainland China are closed for the Golden Week holidays, and trading is set to resume next Tuesday. 

The $3 trillion rally over the last six trading sessions in China indexes was powered by a raft of monetary policy measures to revive investor confidence and facilitate residential property market transactions. 

Initial market enthusiasm turned into a market frenzy after local governments in Shanghai, Shenzhen, and Guangzhou eased home buying restrictions and lowered down payment requirements.

Property stocks soared as much as 60% over the last six sessions as retail investors rushed to increase exposure to residential property developers and companies linked to the construction industry. 

China's president Xi Jinping signaled big fiscal stimulus at a hastily arranged Politburo meeting last week, stoking the market rally further.

The People's Bank of China's $141 billion package to revive investor confidence and the property market is likely to fall far short of what is needed to revive consumer confidence. 

Moreover, the announced monetary stimulus measures are not deep and broad enough to change the nature of the business cycle, consumer mood, and revive the flailing job market. 

Investors are still holding out for more gains after the release of fiscal measures over the next two weeks, but previous measures by the government have failed to change China's growth trajectory. 

 

China Stock Movers 

The Hang Seng index decreased 2.8% to 21,818.41, and financial markets in mainland China are set to resume trading next week. 

Property stocks trimmed gains of the previous session after investors questioned the strength of the market rally. 

China Vanke increased 0.7% to HK $12.08, China Resources Land plunged 5.9% to HK $29.80, Longfor Group dropped 8.5% to HK $17.14, and Sun Hung Kai Properties declined 1.6% to HK $89.70. 

Electric vehicle makers erased gains of the previous session, despite five leading makers reporting a sharp gain in September unit sales. 

Li Auto declined 3.7% to HK $117.0, BYD fell 1% to HK $296.40, NIO jumped 6% to HK $55.60, and Xpeng dropped 6.3% to HK $51.55. 

Alibaba Group dropped 4% to HK $110.40, Tencent Holding declined 1.1% to HK $464.80, and Baidu Inc. dropped 4.7% to HK $109.80.