Hong Kong’s Hang Seng Index drops about 3%; oil prices fall 4%

SINGAPORE — Stocks in China lagged Asia-Pacific markets on Tuesday, although some losses were pared following the release of Chinese economic data well above expectations.

Hong Kong’s Hang Seng index momentarily fell more than 4% before partially recovering, dropping 2.99% in the afternoon. It came after the benchmark closed on Monday at its lowest level since March 2016.

Chinese tech stocks in Hong Kong erased some losses, with the Hang Seng Tech index briefly moving into positive territory before shedding those gains, slipping 2.36%. The index had previously fallen more than 7%.

As investors continued to assess the prospect of potential delistings from U.S. exchanges, dual-listed Chinese tech stocks continued to remain in negative territory: Alibaba was down 6.74% while JD.com fell 5 .17% and NetEase lost 3.38%.

Electric vehicle maker Nio, another dual-listed stock, fell 7.08% after its U.S.-listed shares plunged overnight on renewed delisting fears.

Sentiment in Chinese tech stocks took a hit on Monday following a report that Tencent could face a record fine for breaching anti-money laundering rules.

“The prospect of a record heavy fine against Tencent for violating money laundering regulations has raised concerns that Beijing’s opaque crackdown on the tech space is not yet quite in the rearview mirror,” he said. Mizuho Bank’s Vishnu Varathan wrote in a Tuesday note. .

In mainland China, the Shanghai composite was down more than 2% while the Shenzhen component was down 1.318%.

Data released on Tuesday showed China’s industrial production rose 7.5% year-on-year in January and February from a year earlier, higher than the 3.9% rise forecast by analysts in a Reuters poll.

Retail sales in China for the first two months of the year also beat expectations, gaining 6.7% in January and February compared to analysts’ expectations of a 3% rise in a Reuters poll.

However, China is currently facing its worst Covid-19 outbreak since the peak of the pandemic in 2020, with major cities including Shenzhen rushing to limit business activity.

“It’s really quite a challenging environment. I mean, the markets look incredibly oversold,” Steve Brice, chief investment officer at Standard Chartered Wealth Management, told CNBC’s “Street Signs Asia” on Tuesday. “Maybe when things get better the markets will rebound quite strongly, but it’s hard to see through that…Often the best time to buy, but it just seems a bit difficult today.”

Elsewhere, South Korea’s Kospi lost 0.56%. In Australia, the S&P/ASX 200 slipped 0.73%.

The Nikkei 225 in Japan climbed 0.31% while the Topix index rose 1.02%.

MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 1.59%.

Oil prices drop 4%

Oil prices fell in the afternoon trading hours in Asia on Tuesday, with international benchmark Brent futures slipping 4.05% to $102.57 a barrel. U.S. crude futures fell 4.1% to $98.79 a barrel. These moves came after oil prices fell sharply overnight.

Oil prices have fluctuated wildly since Russia’s invasion of Ukraine, raising fears of supply disruptions in an already tight market. Talks between Ukrainian and Russian officials are expected to resume on Tuesday, following Monday’s talks between the two sides.

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In the U.S. overnight, the S&P 500 lost 0.74% to 4,173.11 while the tech-heavy Nasdaq Composite fell 2.04% to 12,581.22. The Dow Jones Industrial Average was little changed at 32,945.24.

US Treasury yields rose Tuesday morning Asia time. The benchmark 10-year Treasury yield climbed to 2.1597% after rising above 2.14% on Monday. Yields move inversely to prices. The rise in Treasury yields comes as the US Federal Reserve is expected to announce an interest rate hike on Wednesday.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.872 – still higher than the sub-98 levels seen last week.

The Japanese yen was trading at 118.32 to the dollar after weakening from less than 118 against the greenback yesterday. The Australian dollar was at $0.7181 after yesterday’s decline above $0.728.

Steve R. Hansen