China stocks fall on COVID worries, Hong Kong hits near 1-month low

SHANGHAI: China stocks fell on Tuesday as fears of strict COVID-19 curbs in Shanghai reignited worries of a wider economic disruption, while the possible de-listing risks of major Chinese firms from US exchanges dragged Hong Kong to a near one-month low.

China stocks gain as auto stimulus, data offset COVID fears

** At the midday break, the Shanghai Composite index fell 1.01% to 3,280.20, while the blue-chip CSI300 lost 1.26% to 4,299.83.

** The financial sector sub-index eased 0.4%, the consumer staples sector dropped 1.56% and the healthcare sub-index tumbled 2.98%.

** The smaller Shenzhen index was down 1.24%, the start-up board ChiNext Composite index fell 2.4% and Shanghai’s tech-focused STAR50 index plunged 2.52%.

** In Hong Kong, the benchmark Hang Seng Index fell 1.21% to 20,869.09, the lowest since June 17, while Chinese H-shares listed in Hong Kong lost 1.66%.

** Residents in the financial hub of Shanghai have been increasingly nervous about a persistent COVID-19 outbreak of dozens of infections a day just weeks after a painful two-month citywide lockdown was lifted last month.

** “Economic activities are picking up post lockdown from April’s trough, but we tend to believe the road to recovery will be more gradual and bumpier than the V-shaped recovery in 2020,” said Edmond Huang, head of Hong Kong and China research at Credit Suisse.

** Some analyts exect that the A-share market may continue to consolidate in the near term. “Investors should have realised the risk of weaker-than-expected 2Q22 earnings, but still need some time to down revise their estimates,” said Meng Lei, China equities strategist at UBS Securities said in a note.

** “There’s still some uncertainty surrounding 3Q22 economic and corporate earnings recovery,” Meng said, noting the market was yet to see heavy foreign capital inflows.

** In Hong Kong, investors grew worried after a Bloomberg report about possible de-listing risks of Chinese and Hong Kong companies from US exchanges.

** Officials from the world’s two largest economies have held calls in the past week to further negotiations aimed at keeping about 200 Chinese stocks from losing their listings on New York exchanges, and redactions in auditors’ documents are a key barrier.

** Technology giant Alibaba was a major victim, falling 5.35% to HK$107.9 as of midday.