The Hang Seng Index retreated 187 points, or 0.8%, to close at 23,453 on Thursday, reversing early session gains and snapping back from the strong rally seen in the previous day.
Hang Seng turns early gains to finish lower
Selling pressure was broad-based, with all major sectors finishing in the red, led by declines in technology, property, and consumer-related stocks. Investor sentiment turned more cautious as mainland Chinese markets also lost ground after enjoying a three-day bullish streak, driven by optimism over signs of easing US-China trade frictions.
However, that optimism faded quickly following Wednesday’s disappointing credit data, which revealed that China’s new bank loans plunged to a two-decade low in April. The sharp contraction underscored persisting weakness in domestic demand and raised fresh concerns about the fragility of the post-pandemic recovery. Analysts noted that the data reflected both soft consumer and business appetite for credit, exacerbated by lingering uncertainties tied to ongoing US-China trade tensions and a fragile global economic backdrop.
Even Beijing’s announcement that it had lifted its rare earth export ban—previously imposed as part of the broader trade standoff—failed to provide much relief to markets. While the move was seen as a goodwill gesture amid tentative signs of progress in trade talks, investors remained skeptical about the depth and durability of the current de-escalation, given the lack of concrete agreements on key structural issues.
Alibaba to report after the close
Adding to the cautious mood, market participants also positioned defensively ahead of Alibaba’s closely watched earnings report, which is widely viewed as a bellwether for the broader tech sector and consumer spending trends in China. The sector faced additional headwinds as Hang Seng Bank fell 1.1% following the announcement of a strategic business restructuring plan that will affect around 1% of its core workforce, reflecting efforts to streamline operations amid a challenging environment.
Other notable decliners included KE Holdings, which tumbled 5.0% on concerns over persistent weakness in China’s property market; Meituan, down 3.0% amid fears of slowing consumer spending and tighter regulatory scrutiny; and SMIC, which dropped 3.2% on renewed worries about chip export restrictions from the US and sluggish global demand for semiconductors.
On the brighter side, Geely Auto bucked the market trend, surging 2.1% after the company reported a stronger-than-expected jump in quarterly profits, buoyed by robust vehicle sales and improved margins, as cost control measures and higher demand for electric vehicles supported the automaker’s performance.
Despite the modest gain in Geely, the broader tone in Hong Kong remained fragile, with investors bracing for further volatility as geopolitical uncertainties, mixed corporate earnings, and signs of economic softness on the mainland continue to weigh on market sentiment.
