Exchange Fund urged to prop up stock market

Hong Kong should use more funds from its war chest to support its troubled stock market, financial experts say.

For the upcoming budget, the Hong Kong Institute of Financial Analysts and Professional Commentators has suggested that the government raise the proportion of the Exchange Fund's investment in the stock market, which can be used to buy shares of some quality listed companies.

Their call came as Hong Kong stocks inched lower yesterday while other Asian markets rose.

Tech shares led by Baidu (9888) dragged the market down with the benchmark Hang Seng Index ending 0.17 percent lower at 16,216 points, extending its losing streak over the past two weeks.

Turnover remained sluggish at just HK$71 billion.

Baidu was the worst-performing blue chip, slumping 11.5 percent to HK$100.5 per share, a new low in 13 months. The decline came after a report linked its Ernie AI platform to key military research, spurring concerns about retaliation from Washington.

Baidu on Monday denied any affiliation or partnership with the institute. But the report about the hookup with the PLA raised concerns that Washington may consider imposing sanctions on Chinese firms to curtail such collaborations, part of larger efforts to contain its geopolitical rival.

The tech gauge of the HSI also slid 1.9 percent to 3,404 points.

Alibaba (9988) dipped 0.78 percent, as it denied reports that it was selling its delivery unit Ele.me to Bytedance.

A previous report said Bytedance offered US$7 billion (HK$54 billion) but Alibaba asked for as much as US$8 billion.

And Lazada, one of Alibaba's international e-commerce platforms, reportedly dismissed about 100 employees in Singapore.

BYD (1211) lost 2 percent on news that the EV giant was in talks with Brazil's Sigma Lithium on a supply deal.

Chow Tai Fook (1929) rose 2.2 percent after sales in Hong Kong and Macau jumped in the previous quarter.

Stocks in Japan, South Korea and Taiwan finished higher, exacerbating the trend of Hong Kong underperforming compared to its Asian peers since last year.

Mainland markets showed a mixed performance. The index of the Shanghai Stock Exchange edged up 4 points while that of the Shenzhen bourse lost 32 points.

HSBC Global Research remains optimistic about mainland's markets and projects, anticipating the HSI to rebound to 19,300 points by the end of this year.