Hang Seng index retreats as Hong Kong real estate stocks sink

July 24, 2023 11:00 AM AEST | By Invezz

Hang Seng index retreats as Hong Kong real estate stocks sink — Image source: Invezz

Housing stocks sink

The Hang Seng index crashed as concerns about the housing market continued. As a result, real estate stocks were the worst-performers in the index. Country Garden Services and Country Garden Holdings stocks plunged by 15.8% and 5.80%, respectively.

After surging between October and November, the two shares have fallen by over 60%. They have also dropped by ~90% from the highest level in 2017. Meanwhile, Hang Lung Properties stock dropped by 3.65% on Monday while Longfor Properties fell by more than 10%.

Other real estate stocks in the Hang Seng index like China Resources Land, Wharf Real Estate, Citic Pacific, and Link Real Estate were all in the red.

There are concerns about demand in the real estate sector as the Chinese economy slows. Data published this month revealed that the economy was slowing. For example, inflation dropped to 0% while the GDP expanded at a lower pace than expected. Retail sales were weak while the youth unemployment rate jumped to a record high.

Real estate stocks also dropped sharply because of the fear of a denbt crosis in the sector. Several well-known companies like Evergrande and Kaisa have struggled to pay their debts. As a result, several investors have filed petitions to wind them down.

Key earnings ahead

The next catalysts for the Hang Seng index will be corporate earnings from the United States and the interest rate decision by the Fed. over 150 companies in the S&P 500 index like Microsoft, Google, and Meta Platforms will publish their results. These stocks tends to have an impact on the global equities market.

The Hang Seng index will also react to interest rate decisions by several central banks. The Federal Resrve will publish its decision on Wednesday while the European Central Bank (ECB) and BoJ will deliver on Thursday and Friday.

Economists expect that the Fed will decide to hike rates by 0.25% this week and then hold them steady for a while. If this happens, the Hong Kong Monetary Authority (HKMA) will follow suit because of the HKD peg.

The post Hang Seng index retreats as Hong Kong real estate stocks sink appeared first on Invezz.

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