China stocks ended lower on Tuesday as strict COVID-19 curbs in Shanghai reignited worries of a wider economic disruption, while possible de-listing risks of major Chinese firms from U.S. exchanges dragged Hong Kong shares to a 1-1/2-month low.

 

** At the market close, the Shanghai Composite index was down 0.97% at 3,281.47, while the blue-chip CSI300 lost 0.94% to 4,313.62.

 

** The financial sector sub-index eased 0.17%, the consumer staples sector dropped 0.81% and the healthcare sub-index tumbled 3.17%.

 

** The smaller Shenzhen index was down 1.45%, the start-up board ChiNext Composite index fell 2.34% and Shanghai's tech-focused STAR50 index plunged 2.95%.

 

** In Hong Kong, the benchmark Hang Seng Index dropped 1.32% to 20,844.74, the lowest closing price since May 27, while Chinese H-shares listed in Hong Kong lost 1.77%.

 

** Residents in the financial hub of Shanghai have been increasingly nervous about a persistent COVID-19 outbreak of dozens of infections a day just weeks after a painful two-month citywide lockdown was lifted last month.

 

** "Economic activities are picking up post lockdown from April's trough, but we tend to believe the road to recovery will be more gradual and bumpier than the V-shaped recovery in 2020," said Edmond Huang, head of Hong Kong and China research at Credit Suisse.

 

** Some analysts expect that the A-share market may continue to consolidate in the near term. "Investors should have realised the risk of weaker-than-expected 2Q22 earnings, but still need some time to down revise their estimates," said Meng Lei, China equities strategist at UBS Securities said in a note.

 

** Market participants will quickly switch their attention to a slew of key economic indicators including the Q2 gross domestic product and activity indicators to gauge the health of the broad economy.

 

** "There's still some uncertainty surrounding 3Q22 economic and corporate earnings recovery," Meng said, noting the market was yet to see heavy foreign capital inflows.

 

** In Hong Kong, investors grew worried after a Bloomberg report about possible de-listing risks of Chinese and Hong Kong companies from U.S. exchanges.

 

** Officials from the world's two largest economies have held calls in the past week to further negotiations aimed at keeping about 200 Chinese stocks from losing their listings on New York exchanges, and redactions in auditors' documents are a key barrier.

 

** Technology giant Alibaba was a major laggard, falling 5.44% to HK$107.8 at the close.

(Reporting by the Shanghai Newsroom; Editing by Uttaresh.V and Sherry Jacob-Phillips)


Reuters