Hong Kong stocks fell after China’s action plan to boost the nation’s markets through long-term investments failed to impress investors, while the threat of tariffs from US President Donald Trump also weighed on sentiment.
The Hang Seng Index fell 0.5 per cent at 19,686.62 as of 2.34pm local time, after rising as much as 1.3 per cent earlier. The Hang Seng Tech Index dropped 1.5 per cent, reversing gains of as much as 1 per cent.
On the mainland, the CSI 300 Index was up 0.4 per cent, after advancing as much as 1.8 per cent, the most since January 14. The Shanghai Composite Index rose 0.7 per cent.
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Starting this year, 30 per cent of the annual insurance premium earned from new policy sales will be invested in China’s onshore markets, Wu Qing, the chairman of the China Securities Regulatory Commission, said at a press conference in Beijing on Thursday. These investments would increase by 10 per cent every year over the next three years, he added.
CSRC chairman Wu Qing announced plans on Thursday to boost the nation’s stock markets. Photo: Reuters alt=CSRC chairman Wu Qing announced plans on Thursday to boost the nation’s stock markets. Photo: Reuters>
The measures comes as China tries to counter the threat of tariffs from Trump, who said that he was considering a 10 per cent tariff on Chinese exports from February 1.
At least 100 billion yuan (US$13.8 billion) of insurance funds will be allocated for the stock market in a pilot programme within the first six months, half of which will be approved before the Lunar New Year that commences on January 29, Xiao Yuanqi, the vice-chairman of the National Financial Regulatory Administration, said at the same press conference.
China’s policy moves could end up benefiting some of the mainland’s large caps, as funds could end up increasing positions in less volatile companies, according to Kai Wang, Asia equity market strategist at Morningstar.
However, he added that further fiscal policy clarity was needed and excess real estate inventory had to be addressed for the market’s recovery to be sustained.
Property developers were the big losers. CK Hutchison Holdings fell 2 per cent to HK$39.20, Sun Hung Kai Properties eased 1.7 per cent to HK$69.50, while Country Garden slumped 14.4 per cent to HK$0.42.
Semiconductor producer SMIC reversed gains to trade 6.7 per cent lower at HK$39.30, while carmaker Li Auto dropped 3.3 per cent to HK$87.70 and BYD lost 2.3 per cent to HK$270.20.
“I think it’s a Trump effect,” said Brock Silvers, chief investment officer at private equity investment firm Kaiyuan Capital in Hong Kong.
“China’s current measures aren’t saving developers, which must eventually deal with an evolving business model likely leading to a smaller and less profitable sector.”
Disposable tableware maker Fuling Technology debuted in Shenzhen. The company’s shares rose 350 per cent to 23.88 yuan.
Major Asian markets were mixed. Japan’s Nikkei 225 advanced 0.9 per cent, South Korea’s Kospi dropped 1.1 per cent and Australia’s S&P/ASX 200 fell 0.6 per cent.
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