my NEWS Hong Kong stocks drop, halting Year of Dragon rally, on China policy rate decision, Hang Seng Index letdown Stocks halt the Year of the Dragon’s three-day winning run following China’s Sunday decision to hold its policy rate unchanged for a sixth month Index compiler last week kept its Hang Seng Index membership unchanged at 82; index hopefuls Kuaishou, Xpeng, Swire Properties slide The Hang Seng Index slipped 0.9 per cent to 16,188.78 at 10.50am local time, after gaining 3.8 per cent last week. The Tech Index lost 2.4 per cent, and the Shanghai Composite Index jumped 1 per cent after markets resumed trading following a week-long Lunar New Year holiday. Tencent declined 1.6 per cent to HK$287.20, Alibaba Group weakened 1.5 per cent to HK$71.90 while e-commerce peer JD.com retreated 4.5 per cent to HK$91.40. Sportswear maker Li Ning slumped 8.2 per cent to HK$19.50 and developer Longfor lost 6.8 per cent to HK$8.74. The People’s Bank of China left the rate on the medium-term lending facility at 2.5 per cent on Sunday, unchanged for a sixth straight month in a decision seen as protecting the currency downside. The yuan has weakened to 7.206 per US dollar in offshore trading from 7.187 three weeks ago. “Authorities believe poor sentiment, rather than weak economic fundamentals, is behind the drop in share prices,” analysts at BCA Research said in a report. “Thus, they will resort to regulatory measures rather than provide large stimulus to the economy. The weak economic backdrop implies that any intervention-driven rally in Chinese stocks is likely to be short-lived.” Meanwhile, stocks listed on mainland bourses rose as the local financial markets reopened after a week-long Lunar New Year, catching up with robust gains in global markets last week. The Shanghai Composite Index jumped 1 per cent, while the CSI 300 Index added 0.5 per cent at 10.50am local time. Benchmarks in Hong Kong surged 3.8 per cent last week, and Japan’s Nikkei 225 rose 4.3 per cent, while the S&P 500 in New York touched a record high. Hang Seng Index compiler leaves blue chip benchmark unchanged in latest review The Hang Seng Index rallied last week in an auspicious start to the Year of the Dragon to add to a 1.4 per cent gain in the preceding week, the market’s best back-to-back weekly gain since June. China made a surprise cut in the reserve requirement ratio for banks, effective earlier this month, and intervened in the stock market to boost sentiment. Elsewhere, Kuaishou, Swire Properties, Xpeng and JD Logistics declined by 0.8 per cent to 4.3 per cent. The stocks rallied last week on speculation they could be added in the benchmark Hang Seng Index during the quarterly review. The index compiler decided to leave the membership at 82 on Friday. Other major Asian markets were mixed. The Nikkei 225 in Japan lost 0.3 per cent while the Kospi Index in South Korea jumped 0.9 per cent and the S&P ASX 200 in Australia was little changed.
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