Hong Kong stocks slide to 4-month low as stimulus hopes fade
A selloff in tech shares and fading expectations for fresh stimulus to shore up China's economy dented investor sentiment.
Hong Kong's stock market experienced a sharp decline on Thursday, reaching its lowest point in four months. The benchmark Hang Seng index plummeted by 2.9%, while tech shares in Hong Kong plummeted by a more significant 4.6%. Mainland blue chips also faced pressure, with the CSI300 index slipping 1.3% as it approached a technical bear market level - a 20% drop from its June peak. The Shanghai Composite Index followed suit, falling by 0.9%.
Investor sentiment took a hit due to Beijing's piecemeal stimulus measures and the disappointment surrounding stronger-than-expected third-quarter economic growth. This growth, fueled by soaring exports, has reduced expectations for further policy support. Kelly Chung, chief investment officer at Value Partners, noted that Beijing's mortgage interest subsidies for first-time buyers of lower-priced properties did not meet market expectations. As a result, investors have largely discounted the prospect of additional near-term stimulus.
China's economic growth rebounded from three-year lows in the third quarter, driven by robust exports that offset consumer caution. However, analysts caution that the market's growing reliance on external factors is deepening structural imbalances. The tech sector was a significant drag, with both institutional funds and individual investors allocating most of their investments to it in the first half of 2026, as reported by Leo Wang, partner at Qianchuang Capital. This created sectoral bubbles and drained resources from other areas.
The ChiNext Composite index, a key tech indicator, dropped by 2.8%, while the Shanghai tech-focused STAR50 index declined by 1.6% during midday trading on Thursday. The Tencent Holdings and Alibaba shares led the broader market decline. Such a sharp and rapid decline is rare, particularly for a market leader like Tencent.
Chief investment officer at Shengqi Capital, Zeng Wenkai, believes that the market selloff is nearing its end. However, the scars from this painful experience will take time to heal.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
