A screen displays the Hong Kong share index at the Hong Kong Stock Exchange on Oct 4, 2021. (VINCENT YU / AP)
The Hong Kong stock market slumped sharply on Monday after trading of China Evergrande Group shares and its property management unit were suspended on the city’s exchange, and some experts predicted that the Hang Seng Index will continue to sink.
The debt crisis of Evergrande Group and its subsidiary, Evergrande Property Services, continues to plague the Hong Kong stock market. Trading in the shares of the two companies was suspended on Monday morning, along with all the structured products related to the company. The stock market plunged as the day’s trading began, at one point falling more than 600 points.
The Hang Seng Index closed down 539 points, or 2.19 percent, at 24,036, with a market turnover of nearly HK$113.3 billion ($14.55 billion) for the day
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However, shares in Evergrande New Energy Vehicle and HengTen Networks continued to trade normally and both saw significant gains, with Evergrande New Energy Vehicle closing up 29 percent and Evergrande Network up nearly 10 percent.
The Hang Seng Index ended the day down 539 points, or 2.19 percent, at 24,036, with a market turnover of nearly HK$113.3 billion ($14.55 billion) for the day. The tech index also fell around 2.1 percent to 5,973 at close.
Dickie Wong, executive director (research) at Kingston Securities, said the Hong Kong stock market overreacts to negative market news at the moment, causing market jitters in recent trading.
“We forecast the Hang Seng Index may go lower, hovering around the level between 23,300 to 23,700,” Wong told China Daily.
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Wong said he expects the Hong Kong stock market to be sluggish this week as mainland investors cannot trade Hong Kong shares through the Stock Connect program until Friday, the first day of trading after the weeklong National Day holiday on the Chinese mainland.
The Hang Seng Index has underperformed in the past three years, plunging 4,073 points, or 13.6 percent, in 2019, and edging up 958 points, or 3.4 percent, in 2020. The cumulative decline so far this year was 3,208 points, or 11.8 percent, by Oct 4, making it among the worst performers among the world’s major stock markets.