Global growth worries, Taiwan tension maul HSI

The Hang Seng Index plummeted by as much as 650 points and went below the 20,000-point level yesterday amid escalating China-US tension over Taiwan and deepening worries about a global economic slowdown.

The benchmark index then closed 476 points or 2.36 percent lower at 19,689 on a market turnover of HK$118 billion.

All but one blue-chip stock dipped, and the Hang Seng Tech Index also slid by 3 percent.

Tech giant Tencent's shares touched HK$288 at one point, its lowest in nearly four years. But then it pared the loss to 1.5 percent to finish at HK$295.

The mainland's gaming regulator had granted publishing licenses to 136 online games on Monday, but titles belonging to Tencent and NetEase did not make the approved list.

Shares of HSBC fell by 1.6 percent following a 5 percent jump a day earlier after posting better-than-expected quarterly results.

Tensions with the United States are the latest headwind for Chinese equities, which are already reeling from the impact of slowing growth, a deepening property sector crisis and tech crackdowns.

And US House Speaker Nancy Pelosi's planned trip to Taiwan threatened to complicate ties already hurt by a row over trade and a potential delisting of Chinese firms in the United States.

"There's a lot of nervousness in the market about where things will go from here and fear of an actual hot war," said Zhang Fushen, a senior analyst at Shanghai PD Fortune Asset Management.

A Pelosi Taiwan visit could mark a new escalation in China-US relations, agreed Li Weiqing, a partner at JH Investment Management.

"While previously the tensions were economic this may be the first time in years there is direct military contact," he added.

To make matters worse, China's official economic growth target of around 5.5 percent is looking increasingly out of reach.

China should achieve "the best outcome" possible for economic growth this year while sticking to a strict zero-Covid policy, the State Council has said.

"The concern about the economy is also real," said Zhang. "You don't even have to read between the lines of the Politburo readout to realize 5.5 percent is pretty much out of the picture."

Meanwhile, the S&P 500 and Nasdaq 100 futures slumped as much as 0.8 percent by last night, and stocks in Europe also dipped. But gold rose to the highest level since early July as investors braced for a stormy period.

aiden.he@singtaonewscorp.com