Hong Kong stocks erase losses as China rate cut buoys property developers while BYD, EV makers slip amid price war
- China’s commercial lenders made a bigger than expected cut in five-year loan prime rate on Tuesday, a move to spur home purchases
- BYD led losses among Chinese EV makers after a fresh round of price wars threatens to erode profitability
The Hang Seng Index rose 0.6 per cent to 16,247.51 on Tuesday, overturning an earlier drop of as much as 0.6 per cent. The Tech Index erased a 1.6 per cent decline to close with a 0.4 per cent gain, while the Shanghai Composite Index climbed 0.4 per cent.
Longfor surged 3 per cent to HK$9.17, Wharf REIC jumped 3.3 per cent to HK$26.25 while Henderson Land gained 0.9 per cent to HK$21.30 and Sun Hung Kai added 0.9 per cent to HK$72.45.
“There is no shortage of stabilisation measures in place so far, but they have yet to convince the market,” said Gary Ng, senior economist at Natixis. “Investors are seeking more signals from Beijing to get a clearer understanding of future policy directions.”
The cut in the five-year lending rate underscores China’s renewed attempts to stop the multi-year rot in the housing market, a slump triggered by its “three red lines” policy in August 2020 that fanned a record amount of bond defaults among junk-rated developers. Recent official data showed home sales remained sluggish in the new year, while prices sagged.
BYD launches low-price plug-in hybrid, sparking price war in China
The slump in EV stocks ate into early gains in the Year of the Dragon that were built on bets China will deliver its promise to stem a rout with forceful measures.
“As industry leaders cut prices, more carmakers will follow,” said Jason Chan, investment specialist at Bank of East Asia. “The price war is set to last for at least another six months which, along with sector overcapacity, would weigh on carmakers’ profitability. Export growth could also slow this year amid geopolitical risks.”
HSBC finishes latest round of US$7 billion buy-back before 2023 profit report
Elsewhere, HSBC climbed 0.4 per cent to HK$62.65 and its subsidiary Hang Seng Bank rose 1 per cent to HK$81.85. The UK banking group, which counts Hong Kong as its single biggest market, may report a 76 per cent jump in annual net profit in 2023 according to consensus among analysts tracked by Bloomberg. The report is due on Wednesday.
Other major Asian markets traded lower. The Kospi Index in South Korea tumbled 0.8 per cent while the S&P ASX 200 in Australia lost 0.1 per cent and the Nikkei 225 in Japan fell 0.3 per cent.