China shares fall on economic outlook, HK down on signs of tech crackdown

China shares fall on economic outlook, HK down on signs of tech crackdown
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SHANGHAI (June 22): Mainland Chinese shares ended lower on Wednesday (June 22) as extreme weather in some parts of the country added uncertainty to the economic recovery from Covid-19 shocks, while signs of a fresh crackdown on tech firms and the platform economy hurt the Hong Kong market.

At the market close, the Shanghai Composite Index closed down 1.2% at 3,267.2 points, while the blue-chip CSI 300 Index lost 1.27% to 4,270.62.

The financial sector sub-index edged down 1.48%, the consumer staples sector eased 0.54%, while the real estate index fell 1.65%.

Hong Kong's benchmark Hang Seng Index dropped 2.56% to 21,008.34 points at the close, while the Hong Kong China Enterprises Index lost 2.84%.

Heatwaves in northern and central China drove up electricity demand to record levels as millions switched on air conditioners to escape the sweltering conditions, while floodwaters in the south submerged villages and trapped city residents. 

While some investors were worried that the flood could prompt supply chain disruptions, a latest UBS survey of 507 senior corporate executives conducted in April and May showed that Covid-19 disruptions had caused more negative impact on business than that in 2021, the bank said in a note.

"Respondents reported a softer outlook for the second half of 2022 with expectations of slower sales growth, lower profit margins, as well as weaker domestic and export orders."

Some traders and analysts said markets will pay close attention to June economic indicators to gauge the pace of the economic recovery after the financial hub of Shanghai lifted its two-month lockdown at the start of this month.

In Hong Kong, shares snapped a three-day rally, pressured by fresh investor worries over a clampdown on tech firms, while global growth prospects, stubbornly high inflation and tighter financial conditions also hurt sentiment.

The tech sector was among the biggest loser, with the Hang Seng Tech Index plunging 4.37%, after regulators sought public consultation on potentially banning third-party pharmaceutical e-commerce platforms from online drug sales.

Shares in pharmaceutical e-commerce platform operator Alibaba Health Information Technology Ltd closed down 13.85% at HK$4.79 (about RM2.69), and its rival JD Health International Inc tumbled 14.84% to HK$53.40.

Separately, Hong Kong-listed Chinese live streaming services providers also tumbled after Chinese regulators rolled out fresh measures regulating the industry. Shares in Kuaishou Technology lost 4.08% to HK$82.35 at the close.

Market participants will monitor US Federal Reserve chair Jerome Powell's testimony to Congress later in the session, with investors looking for further clues about whether another 75-basis-point rate hike is on the cards in July.