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Wuxi Biologics, China site. Wuxi Biologics shares plunged after the US Homeland Security and Governmental Affairs advanced a bill that proposes to prohibit contracting with certain biotechnology providers connected to ‘foreign adversaries’. Photo: Wuxi Biologics
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Hong Kong stocks hit by geopolitics as China’s biotech companies in US lawmakers’ cross hairs

  • US lawmakers advanced a bill that aims to prohibit federal contracting with certain biotechnology providers connected to ‘foreign adversaries’
  • JD.com gained after unveiling share buy-back programmes
Hong Kong stock market
Jiaxing Li
Jiaxing Li
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Hong Kong stocks slipped amid heightened geopolitical tensions after a US Senate committee advanced a bill targeting Chinese biotech companies. Wuxi Biologics and Wuxi AppTec plunged following the proposal.

The Hang Seng Index closed 1.3 per cent lower at 16,190.34 on Thursday, after gaining as much as 0.5 per cent. The Tech Index lost 1.6 per cent and the Shanghai Composite Index edged down 0.4 per cent.

Wuxi Biologics sank 20.2 per cent to HK$17.34 while its sister company Wuxi AppTec tumbled 20 per cent to HK$45.40, after the US Senate’s Homeland Security and Governmental Affairs Committee on Wednesday advanced a bill that proposes to prohibit federal contracting with certain biotechnology providers connected to “foreign adversaries”. The two stocks have both tumbled nearly 40 per cent this year.
Among gainers, JD.com jumped 6.1 per cent to HK$94.65, after the e-commerce giant’s consensus beating earnings and its announcement of a US$3 billion buy-back plan. HSBC added 0.7 per cent to HK$58.50 and Bank of China (Hong Kong) gained 1 per cent to HK$21.10.

Thursday’s setback brings the loss this week to 2.2 per cent, following the 6.6 per cent jump last month, as investors fretted about the lack of strong fiscal stimulus package during the “two sessions”, China’s annual parliamentary meeting, and remain concerned about the growth trajectory of the world’s second largest economy.

Meanwhile, market intervention through purchases by China’s national team, a term that refers to state-backed buyers, is also seen fading and this could see more reversals in stock prices.

“Market intervention is never a good sign. It creates a false bottom for Chinese equities,” said Seng Liew, director at Emerging Markets Investors Alliance.

Other Asian markets were mixed. Japan’s Nikkei 225 lost 1.2 per cent after the yen strengthened to the highest level in a month against US dollar. Australia’s S&P/ASX 200 and South Korea’s Kospi Index both gained about 0.2 per cent after Federal Reserve chair Powell said the US central bank will begin dialling back policy restraints at some point this year.

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