Hong Kong Stocks Decline as Concerns Mount Over Mainland China's Property Market

Hong Kong stocks saw a decline, with a particular focus on the losses incurred by mainland China's major banks, notably the Industrial and Commercial Bank of China (ICBC). Worries have arisen about these banks' exposure to the distressed Chinese property market. The Hang Seng Index lost 0.2% to 17,370.86, initially dropping as much as 1%. Meanwhile, the Tech Index managed to gain 0.9%, and the Shanghai Composite Index experienced a slight 0.1% increase.

ICBC witnessed a significant fall of 3.1% to HK$3.73, while China Construction Bank faced a 2% decrease to HK$4.47, and Bank of China weakened by 1.1% to HK$2.73. Additionally, major Chinese tech giants, including Alibaba Group, Baidu, and JD.com, encountered declines of 1%, 0.6%, and 0.5%, respectively.

In the realm of international banking, HSBC reported third-quarter earnings that fell short of market estimates. The bank posted a pre-tax profit of US$7.7 billion, marking a notable improvement from the previous year but still trailing consensus estimates. The stock initially plunged by as much as 2.2% before paring down the losses to 0.6% at HK$57.70. Bank of China is expected to report earnings that likely increased by 4% to 55.43 billion yuan (US$7.6 billion).

Caution and concern have enveloped the Hong Kong stock market, exacerbated by Standard Chartered's recent report of disappointing third-quarter earnings due to high impairment charges tied to loans to mainland Chinese developers. Furthermore, a report by Goldman Sachs revealed that 57% of Chinese companies fell short of expectations in their third-quarter earnings.

The Hang Seng Index has grappled with a 2.4% decline this month, marking its third consecutive monthly drop. Various factors, including China's shaky economic recovery and escalating geopolitical tensions in the Middle East, have contributed to this downward trend. Notably, foreign investors have divested more than 160 billion yuan of A shares over the past three months, as indicated by Stock Connect data.

Adding to the concerns, property stocks in Hong Kong extended their losses as the winding-up hearing associated with China Evergrande Group was postponed to December 4. Companies such as Longfor Group and China Overseas encountered losses of 0.2% and 0.3%, respectively.

While the Hong Kong market faces ongoing uncertainty, the impact of recent supportive policies on expectations for an economic recovery remains to be seen. As Dai Qing, an analyst at Guotai Junan Securities, noted, "Hong Kong stocks will continue to face long-term uncertainty."

In broader Asian markets, the performance was mixed, with South Korea's Kospi gaining 0.3%, Australia's S&P/ASX 200 losing 0.8%, and Japan's Nikkei 225 dropping by 1%.

By fLEXI tEAM