FX.co ★ Hong Kong Equities Under Pressure

Hong Kong stocks experienced a significant decline on Thursday, plummeting by 367 points, or 1.4%, to settle at 26,094 during early trading. This marks their second consecutive session of losses, following the retreat of Wall Street’s S&P 500 and Dow Jones from record highs the night before, driven by mixed economic data from the U.S. The downturn was exacerbated by a wave of profit-taking after local markets had reached their highest level in over seven weeks earlier this week. Investor sentiment was further dampened in anticipation of China’s Consumer Price Index (CPI) and Producer Price Index (PPI), scheduled for release on Friday. Additionally, geopolitical tensions contributed to the downturn, with Beijing imposing a ban on dual-use item exports to Japan in response to Taiwanese comments made by Prime Minister Sanae Takaichi. However, losses were somewhat mitigated by an optimistic outlook from Goldman Sachs, which forecasts robust growth in Chinese equities this year, driven by advancements in AI. Meanwhile, new data showed China's foreign exchange reserves reaching a 10-year high in December, marking a sixth consecutive month of increase due to a weaker U.S. dollar. Despite this, all sectors exerted pressure on the benchmark, particularly financials and technology. Notable decliners included Lenovo (-4.2%), Kuaishou (-2.9%), KE Holdings (-2.4%), and Pop Mart International (-1.6%).