The stocks in Hong Kong markets seem to be slipping with a recent report coming up on the tech sector. Chinese funds on the mainland have been keeping a close eye on the upcoming events, which motivated them to start their selling trend to take advantage of a rally.
Xi Jinping’s and Biden’s recent meeting in San Francisco did not help improve any of this sentiment. Biden and Xi indicated that they would work on military communications and AI together. This did have a positive tone to it. However, Biden referred to Xi as a dictator, which ruffled some feathers considerably, boosting negative sentiment.
Hong Kong’s Hang Seng index managed to drop by 1.4% as Thursday trading closed in the area. Mainland funds have made mass sell-offs after the previous large rally of 3.9% this Wednesday, a record high for the month. Most notably, the tech index did the worst, dropping off by 1.9%. Tencent, a major tech company in China and usually one of the best day trading stocks, has been signalling a rather weak trend going into the future. The Shanghai Composite dropped by 0.7%, by comparison.
Analysts believe that Hong Kong’s slowdown is not something authorities can correct anytime soon. More importantly, we should take China’s slowdown in general into account to explain the relative decline for the stocks in Hong Kong.
Analysts have been slashing their forecasts continuously for China for the time being. To further illustrate this, experts have downgraded 4 out of every 5 Chinese companies in Shenzhen and Shanghai markets this year. Evidently, this shows a poor performance for many trending stocks.
By 2028, some analysts believe that China’s annual GDP growth will be as low as 3.5%. Therefore, This is far closer to the growth Western nations usually have, which China may not be comfortable with. China’s annual growth numbers have exceeded 10% many times over the past 4 decades. They may take some time to adjust to the new normal.