Hong Kong Shares Hit Five-Month Low, Asia Stocks Mixed

Hong Kong shares ended at a more than five-month low on Wednesday, while mainland China stocks also fell sharply on persistent concerns over a slowdown in the world’s second-largest economy.

The benchmark Shanghai Composite index dropped 1.9% to 3,215.2, its lowest closing level since August 4, with the blue-chip CSI 300 index also falling 1.9% to end at its lowest closing level since August 3 of 4,082.4.

The start-up board ChiNext Composite index dropped 3.6%, while Shanghai’s tech-focused STAR50 index fell 3.5%.

In Hong Kong, the benchmark Hang Seng Index ended 1.2% lower at 19,268.7, its lowest closing since March 15. Analysts attributed the weakness to worries over the Chinese economy.

Developers led losses, with an index tracking Hong Kong-listed major Chinese real estate companies ending down 2%.

“Beijing may need to consider a more comprehensive solution in its effort to resolve the property market predicament,” said Ting Lu, chief China economist, Nomura. “However, there is a limited likelihood that such a solution will be reached before end-2022.”

Extreme heat in China also played havoc with crops and power supplies despite lower temperatures in some regions, with authorities across the Yangtze river basin scrambling to limit the damage from climate change on crops and livestock.

Electric vehicle (EV) makers were among the top losers, with Xpeng closing down 12.2% after reporting a bigger-than-expected quarterly loss.

Other EV makers also fell, with Hong Kong-listed rivals NIO, Li Auto, BYD and Geely Automobile all down about 5%.

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IPOs Linked to China Merchants Halted

Meanwhile, Chinese bourses halted processing more than 20 initial public offering (IPO) plans sponsored by China Merchants Securities, following an investigation into the broker, according to exchange disclosures.

The Shenzhen Stock Exchange has suspended 15 IPO plans set for its ChiNext board, while the Shanghai exchange has paused five IPOs targeting its tech-focused STAR Market since last Friday, exchange filings showed.

Three other IPOs targeting the Beijing Stock Exchange were also affected.

The bourses attributed the halts to an investigation by the China Securities Regulatory Commission (CSRC) into China Merchants Securities, their common sponsor.

The CSRC decided to file a case against China Merchants, as it failed to perform due diligence and was suspected of rule violations during a case in 2014, the broker said earlier this month.

The brokerage said it would cooperate fully with the CSRC.

Chinese bourses have halted processing batches of IPO applications previously as regulators investigated intermediaries.

Nikkei Tracks Wall Street Lower

Japan’s Nikkei share average ended at a two-week low on Wednesday, tracking overnight Wall Street declines after weak data, although gains in energy companies on higher crude prices limited losses.

The Nikkei was down 0.5% at 28,313.47, its lowest closing level since August 10 and a fifth straight day of losses, while the broader Topix edged down 0.2% to 1,967.18, also a two-week trough.

The utilities sector was Nikkei’s top performer, while energy shares got a boost from a surge in crude oil prices overnight after Saudi Arabia floated the idea of OPEC+ output cuts.

Tokyo Electric was the Nikkei’s top gainer, leaping 9.96% after a local media report said that the government was preparing to restart some nuclear reactors.

Technology was the worst performing sector, followed by healthcare and consumer stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5%, while the US dollar lurked just below milestone highs on most major currencies and near a 20-year peak on the euro.

Dollar strength elsewhere pushed down on the Aussie and kiwi, though the yen rose slightly to 136.48 per dollar.

Brent crude futures slipped back beneath $100 a barrel – the contract was last down 43 cents to $99.79 – amid some doubts about talk of Saudi supply cuts. US crude futures fell 30 cents a barrel to $93.44.

Spot gold held steady at $1,747 an ounce. Bitcoin still bears the scars from a sudden slide at the end of last week and is parked at $21,490.

Aust Shares Snap Two Days of Losses

Australian shares snapped their two-day losing streak, aided by soaring mining and energy stocks, while economic data and hawkish comments from a US Federal Reserve official kept sentiment in check.

The S&P/ASX 200 index ended 0.5% higher at 6,998.1 points at the close of trade, after shedding around 2% over the previous two sessions.

Export-centric miners jumped 1.3% after China’s iron ore prices rose on prospects of strong demand ahead of peak construction season. Sector giants BHP Group and Fortescue Metals Group added 1.1% and 0.4%, respectively.

Financials too joined the broader rally, rising 0.4% with all of the so-called “Big Four” banks trading in positive territory.

Energy stocks emerged as the top gainer on the benchmark with a 2.8% jump through the session, with Santos Ltd and Woodside Energy Group gaining 2.1% and 3.4%, respectively.

Indian Shares Edge Up

Indian shares ended with marginal gains after a day of volatile trading on Wednesday, supported by private banks.

The NSE Nifty 50 index closed 0.16% higher at 17,604.95, after having fallen as much as 0.45%. The S&P BSE Sensex ended up 0.1% at 59,085.43.

The Nifty Private Bank index added 1.6%, with shares of RBL Bank jumping nearly 17%. The stock has risen for the past two days after its board approved raising funds.

Shares of NDTV Ltd gained 5% to their highest in 14 years, a day after billionaire Gautam Adani’s conglomerate said it seeks to control a majority stake in the television media company.

Indian equities are expected to post only minimal gains for the rest of the year amid rising volatility, according to strategists polled by Reuters, who cautioned that the risk to that lacklustre outlook is skewed to the downside.