Hong Kong stocks slide as China’s third plenum underwhelms, geopolitical angst weighs

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Goldman Sachs analysts said more demand-side easing measures – especially on the fiscal and housing fronts – are needed to hit the ‘around 5%’ growth target

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A portrait of former Chinese leader Mao Zedong at Tiananmen Square in Beijing, China, on Saturday, July 6, 2024. Of the countless meetings that China’s Communist Party holds regularly, the Third Plenum scheduled on July 15 stands out for its potential impact on the world’s second-largest economy. Photographer: Na Bian/Bloomberg

Mia Castagnonein Shanghai

Published: 10:49am, 19 Jul 2024Updated: 4:43pm, 19 Jul 2024

Hong Kong stocks tumbled on Friday after China’s third plenum announcement underwhelmed, with investors now awaiting further details about fiscal reforms and steps to boost growth in the world’s second-largest economy.

The Hang Seng Index fell 2 per cent to 17,417.68 at close of trade, bringing the week’s losses to 4.8 per cent. The Hang Seng Tech Index dropped 2.1 per cent but the Shanghai Composite Index added 0.5 per cent.

Property developer Longfor plunged 6 per cent to HK$10.68, while New World Development lost 2.5 per cent to HK7.69 and Sun Hung Kai Properties fell 2.8 per cent to HK$70.15. Alibaba dropped 2.6 per cent to HK$73.80, while peers Baidu fell 1.5 per cent to HK$88.15 and Tencent fell 1.4 per cent to HK$364.

China’s four-day session ended yesterday, also known as the third plenum, and failed to make any major announcement aimed at promoting economic growth.

“We believe more demand-side easing measures – especially on the fiscal and housing fronts – are necessary to secure the full-year ‘around 5%’ real GDP growth target, and view the July Politburo meeting as a window for more easing rhetoric and measures,” said Goldman Sachs in a report.

Some felt that the announcement suggested diminished importance of markets because earlier plenums had declared a ‘decisive role’ for the market and that wording had been removed in this year’s communique.

The committee vowed that China would continue to deepen reforms in all areas, including the economy, rural land, taxation, environmental protection, national security, fighting corruption, and cultural development.