Asia report: Hang Seng hits six-year low as Chinese shares tumble

Markets closed in a mixed state in Asia on Tuesday, with Hong Kong’s benchmark board reaching its lowest level in more than six years, as oil prices continued to slide back from recent spikes.

In Japan, the Nikkei 225 was up 0.15% at 25,346.48, as the yen strengthened 0.14% on the dollar to last trade at JPY 118.03.

Robotics specialist Fanuc gained 0.54%, while among the benchmark’s other major components, Uniqlo owner Fast Retailing fell 4.54%, and tech investing giant SoftBank Group was 4.16% weaker.

The broader Topix index was ahead 0.79% by the end of trading in Tokyo, closing at 1,826.63.

On the mainland, the Shanghai Composite slid 4.95% to 3,063.96, and the smaller, technology-centric Shenzhen Composite was 4.56% lower at 2,013.37.

The moves in China came as the country continued to deal with a fresh outbreak of Covid-19, more than two years after the virus was first identified in the provincial city of Wuhan, with the industrial hub of Shenzhen under new social and trading restrictions.

Economic data released by Beijing on Tuesday did little to lift sentiment, as industrial output jumped 7.5% year-on-year in January and February, and retail sales gained 6.7% in the same period.

Both data points were ahead of expectations pencilled in by Reuters polling, which had picked a 2.9% rise in industrial output and a 3% improvement in retail sales.

South Korea’s Kospi was 0.92% weaker at 2,621.53, while the Hang Seng Index in Hong Kong tumbled 5.72% to 18,415.08.

According to data from Refinite Eikon, it was the lowest close for the special administrative region’s main index since February 2016.

The losses there were led by a turbulent session for technology plays, with the Hang Seng Tech Index closing 8.1% lower after spending the day bobbing above and below the waterline.

Alibaba Group slid 11.93%, JD.com was 10.06% lower, NetEase was 7.68% weaker, and electric car market Nio lost 12.81% by the close.

The losses for Nio came on the back of a seriously negative session for its US-listed shares overnight, where fresh fears of a forced delisting saw them plunge 12.26%.

Seoul’s blue-chip technology stocks were on the back foot as well, with Samsung Electronics down 1% and SK Hynix losing 3.02%.

“Asian markets were troubled for the second day in a row as investors weighed up the potential hit to corporate earnings and economic growth from new Covid lockdowns in China, particularly in the electronics manufacturing sector where disruption to production could lead to another supply chain crisis,” said AJ Bell investment director Russ Mould.

“Ongoing uncertainty over whether China will provide military assistance to Russia also weighed on sentiment.

“Real estate was among the worst performer sectors on the [Shanghai] SSE amid concerns about the fragility of the Chinese property market.”

Mould said Chinese equities fell out of favour in 2021, due to regulatory pressures on a number of sectors.

“In early 2022 investors started to fish for bargains in the region despite plenty of signs that economic growth was slowing.

“A hard-line approach to Covid is not new for the country, but the resurgence in cases has provided a stark reminder that the pandemic is still lingering.

“Investors might have become too complacent over the risks of lockdowns returning once again.”

Oil prices continued to tumble as the region went to bed, falling below the $100 level for the first time in weeks.

Brent crude futures were last down 7.46% on ICE and $98.93 per barrel, and West Texas Intermediate lost 8.31% to $94.45.

In Australia, the S&P/ASX 200 was 0.73% lower at 7,097.40, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.03% to 11,801.73.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.17% at AUD 1.3888, and the Kiwi advancing 0.2% to NZD 1.4794.