Hong Kong stocks start 2022 with a whimper as Covid-19 dents sentiment and Alibaba slips while car makers temper losses

Covid-19 outbreaks in mainland China hit garment maker Shenzhou International while tighter restrictions are being put in place in other affected cities

Trading in Evergrande was halted as developer seeks to implement a repayment plan for investors in US$31 billion of high-yield wealth management products

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Traders working in a brokerage in Seoul on January 3 as virus concerns dominate sentiments. Photo: Bloomberg

Published: 10:51am, 3 Jan 2022Updated: 9:36pm, 3 Jan 2022

Hong Kong stocks fell on concerns tighter rules to stem Omicron infections in the city and mainland China will dent business and economic activity. Limiting losses, carmakers advanced on robust December sales.

The Hang Seng Index slipped 0.5 per cent to 23,274.75 at the close of Monday’s session, following a 0.8 per cent gain in the final week of trading in 2021. It was only the third time in the past 10 years that the benchmark fell on the opening day of trading, after setbacks in 2019 and 2016.

The Hang Seng Tech Index dropped 0.5 per cent, with Alibaba Group Holding and its health information unit retreating by at least 3.3 per cent. Markets in mainland China were shut for a public holiday.

Shenzhou International plunged 7.8 per cent, leading index losers, after the Chinese garment manufacturer reported Covid-19 cases among its employees. Its factories in Ningbo, in eastern province of Zhejiang, were locked down after the firm reported 10 Covid-19 cases since Sunday, it said in a filing.

“The developments of the Covid-19 pandemic remains as a big uncertainty,” Stanley Chik, research director at BrightSmart Securities, said in a note on Monday. Local stocks will remain volatile this year as global central banks tweak rate policies, he added.

In Hong Kong, fears of an Omicron outbreak grew as three cases were confirmed Sunday, including a Cathay Pacific aircrew member who is thought to be the source after breaking isolation rules. Cathay slipped 0.2 per cent to HK$6.38.