Hang Seng Index falls below 23,000 points to three-month low
Hong Kong's Hang Seng Index plunged 697 points to 22,954 in early trading, a three-month low. Analysts warned shares could test 22,500 in the fourth quarter amid a tech selloff and concerns over AI developments, US rate hikes, and mainland wealth tax enforcement.
The benchmark Hang Seng Index plunged as much as 697 points, or 2.95 per cent, to 22,954 points in early trading on 22 October, hitting a three-month low, with analysts warning that Hong Kong shares could fall to 22,500 points in the fourth quarter.
Hong Kong stocks remained under pressure from a tech selloff, with heavyweights Alibaba and Tencent falling 6 per cent and 3.5 per cent, respectively. NetEase and Xiaomi dropped 6.8 per cent and 4 per cent, while Lenovo tumbled 8.9 per cent as the worst-performing blue chip.
By midday break, the Hang Seng Index dropped 679 points, or 2.87 per cent, to 22,971 points, delivering a half-day market turnover of HK$127 billion. The Hang Seng Tech Index also slumped 185 points, or 4.64 per cent, to 3,809 points, a two-year low.
Dicky Wong, executive of research at uSmart Securities, said Hong Kong shares could test 23,300 points, with the fourth quarter potentially edging towards this year's low of 22,500. He cited reports that several mainland tycoons may need to sell shares to pay tax as one possible factor behind the weak performance.
Alan Li, chief investment officer at Blue Water Capital, added that mainland and Hong Kong markets have been weighed down by sentiment around artificial intelligence developments, concerns that the US Federal Reserve will raise interest rates further, China's economic slowdown, and mainland wealth tax enforcement.
Li said the mainland tycoons may raise funds to pay tax by reducing their shareholdings, borrowing from listed companies, or asking listed companies to help cover the tax. All three approaches would be detrimental to the share price performance of the listed companies.
In the mainland, the Shanghai Stock Exchange Composite Index fell 33 points, or 0.89 per cent, to 3,679 points, and the Shenzhen Stock Exchange Composite Index dipped 1.78 per cent to 11,496 points.