Stocks fall as Hong Kong hammered again, oil retreats

BANGKOK

Equity markets fell yesterday, with Hong Kong tech firms leading another collapse in the city’s Hang Seng Index following the COVID-19 shutdown of tech hub Shenzhen and worries over Russia’s military outreach to China.

Concerns about China’s economic outlook saw oil prices suffer fresh selling pressure, with WTI falling back below $100 a week after it hit a 14-year high on the back of Vladimir Putin’s invasion of Ukraine.

Hopes for progress in talks to bring an end to the war in eastern Europe were also putting pressure on the black gold.
Global markets have been in a spiral since Russian troops marched into the neighboring country, leading international powers to impose crippling sanctions on the country and numerous companies to pull out.

The measures have fanned concerns about the supply of commodities from the region, particularly oil, sending prices through the roof and ramping up fears that already high inflation would run out of control and shoot a hole through a fragile
economic recovery.

Among the hardest-hit markets has been Hong Kong, which was already under pressure from China’s regulatory crackdown on technology firms as part of the government’s move to tighten its grip on the economy.

News that U.S. authorities were also looking to crack the whip over Chinese firms listed in New York sparked a rout last week. And the selling continued on March 14 after news emerged of the Shenzhen lockdown.

The Hang Seng Index dived on March 14 as the Hang Seng Tech Index was pummeled 11 percent after China said it would lock down Shenzhen to contain a COVID-19 outbreak.

Another trouncing came later in the day in New York, exacerbated by news that Putin had asked China for military assistance in its battle in Ukraine.

Traders are fretting that Chinese companies could face sanctions or delisting if Beijing reacts positively to Russia’s plea.
China’s foreign minister said Beijing did not want to be impacted by Western sanctions on Russia, state media reported yesterday.

A “material rerating for China tech may need to see a shift in regulatory tone,” Marvin Chen, a strategist at Bloomberg Intelligence, said, adding that interplay between Moscow and Beijing would be closely followed.

“Delisting fears and renewed Covid pressures delivered a double-whammy to the few bulls left. There’s wholesale liquidation and even optimists think the space is just too hard right now.”

The Hang Seng Index dived more than 6 percent at one point yesterday and the tech index almost 8 percent.

Afternoon selling wiped out a minor bounce from data out of China suggesting the economy started 2022 on a positive note.

Shanghai was also in trouble, losing 5 percent, while Sydney, Seoul, Mumbai, Taipei, Jakarta, Bangkok and Wellington were also well down, though Tokyo, Singapore and Manila rose.

While data out of China beat forecasts, unemployment jumped and the shutdown in Shenzhen along with a surge in COVID-19 cases across the country has ramped up concerns the giant economy will see another growth slowdown.

That, in turn, has seen traders cut their expectations for demand from the world’s biggest oil importer, with WTI dropping to as low as $96.70, well down from the 14-year peak of $130.50 touched last week.

Brent was also sharply down at $100.05, from its peak last week of $139.13.

The selling on oil markets was compounded by indications that moves were progressing on bringing the Ukraine war to an end.