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Investing.com– Hong Kong stocks plunged to a near three-month low on Tuesday as a mix of growing tensions between the United States and China, and weak economic growth data weighed on sentiment.
The benchmark Hang Seng index dropped as much as 3%, and was trading at its lowest level since early May. Technology heavyweights Tencent Holdings Ltd (HK:0700) and Alibaba Group Holding Ltd (HK:9988) lost around 2.3% each.
Real estate stocks continued to be the worst performers on the Hang Seng, as investors feared contagion from their exposure to Chinese markets.
Asian stock markets fell sharply on Tuesday as investors feared a potential escalation in U.S.-China tensions. House of Representatives Speaker Nancy Pelosi is expected to visit Taiwan later in the day- a move that has been strongly opposed by Beijing.
Losses in Hong Kong outpaced their Asian peers after data on Monday showed that the city’s economy contracted 1.4% in the second quarter of 2022.
The contraction was far worse than forecast by analysts, and came after new COVID-19 lockdowns hindered economic activity this year.
Hong Kong is facing slowing exports and investments, as the city still enforces anti-COVID measures, as part of China’s zero-COVID policy. Its borders have been mostly shut since 2020.
“Looking ahead, the worsening global economic prospects will continue to weigh on Hong Kong’s export performance in the remainder of the year,” the city’s government said in an announcement.
Among other heavyweight Hong Kong stocks, global lender HSBC Holdings PLC (HK:0005) dropped about 1.5%, even after the bank logged a bumper profit and promised to raise dividends back to pre-COVID levels.
The bank is struggling to convince shareholders to vote against a potential proposal to spin off its Hong Kong business into a separate entity. The move has been bought up by Chinese insurer Ping An (HK:2318), which holds an 8.26% stake in the bank.
