Hong Kong Market Slumps, Set for Steep Weekly Decline

The Hang Seng fell 325 points, or 1.2%, to finish at 26,560 on Friday, reversing strength in the prior three sessions amid broad sector declines. Sentiment was pressured by Wall Street’s third straight sell-off Thursday, highlighting mounting concerns that new AI models could erode software firm profits. In China, equities extended weakness amid caution ahead of January CPI data, with recent gold price volatility seen as a potential driver of consumer inflation. For the week, the index lost 3.0%, its first decline in four weeks, as traders anticipate thinner activity in Hong Kong and mainland markets ahead of the Lunar New Year holiday beginning February 15. Knowledge Atlas Tech (-6.1%), AIA Group (-5.2%), and Minimax Group (-4.9%) were among today’s biggest losers. Meituan slipped 2.2% after agreeing to acquire Dingdong Fresh, the China unit of Dingdong (Cayman), for USD 717 million, though challenges in its core commerce and resource-heavy overseas expansion remain.

Hong Kong stocks slumped 404 points, or 1.5%, to 26,488 in early Friday trade, snapping a three-day rebound as U.S. futures weakened sharply after Wall Street’s tech-led selloff showed little sign of easing. Mainland shares also fell for a second session, weighed by persistent concerns over China’s slowing momentum and weak demand ahead of the mid-February Spring Festival. Investor caution also mounted ahead of January’s CPI and PPI data in China next week. In December, the annual inflation edged up to a near three-year high of 0.8% yoy while producer prices dropped 1.9%, extending a 39-month decline. The Hang Seng is on track for a steep weekly loss of over 3%, its first in four weeks, though sentiment was partly supported by strong IPO activity. Sector losses were broad, led by financials (-2%), property, and tech. Major laggards included AIA Group (-5.5%), Laopu Old (-3.7%), Zijin Mining (-3.1%), SenseTime Group (-3.0%), and SMIC (-2.2%).

The Hang Seng edged up 38 points, or 0.1%, to close at 26,885 on Thursday, reversing steep morning losses and marking a third straight gain as most sectors turned higher. Property, tech, and consumer stocks advanced as policy-related jitters eased after China's tax officials dismissed speculation about potential tax adjustments across multiple industries. Sentiment was further lifted by a strong IPO pipeline in Hong Kong, with 13 new listings completed by the end of January, extending the robust momentum in 2025. Also, bets grew that Beijing may roll out fresh support measures after the Lunar New Year, as China’s national legislature is set to meet in March to outline policy priorities and set economic growth targets for 2026. Baidu Hong Kong climbed 2.7% after unveiling plans for its first-ever dividend alongside a share buyback program. Other notable gainers included Xiaomi Corp. (2.8%), Mixue Group (2.7%), Pop Mart Intl. (2.2%), and Meituan (1.6%).