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Hong Kong stocks hit one-week low as PBOC tempers easing bets, China Merchants Bank sinks
- China’s central bank issued guidelines on its approach to support the Covid-hit economy, also avoided any mention of reserve requirement ratio
- China Merchants Bank sank after the board on Monday voted 15-0 to remove Tian Huiyu as president and director without giving a reason
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Hong Kong stocks tumbled by the most in one week after China’s central bank signalled it’s not ready to unleash its full policy easing power to revive a faltering economy. China Merchants Bank sank after removing its top executive without giving a reason.
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The Hang Seng Index retreated 2.3 per cent to 21,027.76 at the close of Tuesday trading, as the market reopened after a two-day holiday. The Tech Index weakened 3.8 per cent, while the Shanghai Composite Index was little changed.
China Merchants Bank led losses as the nation’s biggest retail lender sank 11.5 per cent to HK$52.90, the most in 11 years. Meituan slumped 5.9 per cent to HK$146, while Alibaba Group Holding retreated 4.2 per cent to HK$91.5. Anta Sports and Li Ning both lost at least 5 per cent.
The People’s Bank of China issued guidelines late Monday on its approach to support the economy hit by citywide lockdowns in Shanghai and elsewhere, and avoided any mention of reserve requirement ratio. The central bank made a token 25 basis point cut in the ratio on Friday, the smallest reduction in history, according to Goldman Sachs.
“Room for further reserve ratio cut is indeed narrowing,” said Nathan Chow, senior economist and strategist at DBS Bank, in a note on Monday. “Subdued loan demand due to regulatory clampdown and pandemic controls are also hindering the efficacy of monetary policy.”
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China Merchants Bank slipped for a second day in Shanghai. The board on Monday removed its president Tian Huiyu without giving a reason. The decision was preceded by a US$11 billion sell-off amid a local news report that an unnamed senior executive was assisting the government with a probe.
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