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Asian stocks retreat as China rally cools, Hong Kong slammed by tech rout

Published 05/20/2024, 11:08 PM
© Reuters.

Investing.com-- Most Asian stocks fell slightly on Tuesday as a stimulus-driven rally in Chinese markets ran dry, while concerns over high for longer interest rates also chipped away at sentiment. 

Hong Kong’s Hang Seng index was the worst performer for the day, battered by a rout in electric vehicle and technology stocks. 

Broader regional technology stocks also stalled as investors grew uncertain ahead of closely-watched earnings from artificial intelligence darling NVIDIA Corporation (NASDAQ:NVDA), due this Wednesday. 

Wall Street indexes provided middling cues to Asian markets, after logging a mixed close on Monday. While strength in tech drove the NASDAQ Composite to record highs, most other sectors lagged amid persistent uncertainty over interest rates. U.S. stock index futures fell slightly in Asian trade.

China rally stalls, more stimulus cues awaited 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.3% and 0.4%, respectively, retreating from their highest levels seen in 2024 so far. 

Local markets were subject to some profit-taking after a stellar rebound over the past two months.

But markets were also waiting to see how Beijing would roll out its latest list of stimulus measures, and their potential effects on the economy. While optimism over more stimulus was a key driver of China’s recent stock rally, markets were now waiting to see just how much the measures would support the economy. 

Analysts said the rollout of China’s stimulus packages will be the key to an economic recovery, particularly the ones aimed at the beleaguered property market. 

Hong Kong stocks slide on EV, tech losses 

Hong Kong’s Hang Seng index was the worst performer in Asia on Tuesday, sliding as much as 2% from a nine-month high.

The outsized loss was driven chiefly by a nearly 20% slump in shares of Li Auto (NASDAQ:LI) Inc (HK:2015), after the electric vehicle maker clocked disappointing first quarter earnings. Losses in Li spilled over into other EV stocks, with BYD (SZ:002594) Co Ltd (HK:1211) and Geely Automobile Holdings Ltd (HK:0175) down over 3% each.

Hong Kong’s biggest tech stocks also fell for individual reasons. Tencent Holdings Ltd (HK:0700) slid 3% after its hotly anticipated Dungeon & Fighter mobile game was taken offline just an hour after its launch.

Alibaba Group Holding Ltd (HK:9988) (NYSE:BABA) fell 1% after its cloud unit further slashed prices, specifically for the firm’s Tongyi Qianwen AI bot. 

Baidu Inc (HK:9888) (NASDAQ:BIDU) sank 3%, tracking losses in its peers. 

Broader Asian markets moved in a flat-to-low range, as investors awaited more cues on U.S. interest rates this week. Japan’s Nikkei 225 rose 0.2%, while the broader TOPIX index rose 0.1%.

Australia’s ASX 200 fell 0.3% after the minutes of the Reserve Bank of Australia’s May meeting showed the bank did consider raising interest rates to combat sticky inflation.

South Korea’s KOSPI fell 0.5%, while futures for India’s Nifty 50 index pointed to a mildly positive open. 

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