Chinese Government-Induced 'Regulatory Fear'... Hong Kong Stock Market Hits Lowest Point in 10 Years This Year

[Asia Economy Reporter Ki-min Lee] Although the global stock markets reached record highs this year, the Hong Kong stock market, caught in the midst of 'regulatory fear' stemming from China, recorded its worst performance in 10 years.

According to the Hong Kong Stock Exchange on the 31st, the Hang Seng Index closed at 23,397.67, up 1.24% from the previous trading day, on the last trading day of the year.

However, looking at the entire year, the Hong Kong stock market retreated significantly.

The Hang Seng Index fell 14.08%, marking its lowest level in 10 years since 2011. In particular, the Hang Seng Tech Index, which reflects the trends of technology stocks listed on the Hong Kong stock market such as Alibaba, closed at 5,670.96 on the day, down 32.7% for the year. Compared to the peak in March (11,001.78), it is almost half.

[Image source=Reuters Yonhap News]

This stands out compared to 21 stock indices including the U.S. that hit record highs this year. Among individual companies, Alibaba’s stock price, which became a key regulatory target of Chinese authorities after Ma Yun’s (Jack Ma’s) tongue-lashing incident, plummeted nearly 50% this year. After Ma Yun openly criticized Chinese regulations last year, authorities launched stringent regulations on big tech industries such as internet platforms.

Additionally, as part of President Xi Jinping’s efforts to consolidate his long-term rule, reforms and anti-corruption campaigns swept through most social and economic sectors including real estate, education, culture, and entertainment.

As a result, stocks in the targeted sectors also could not avoid a sharp decline. Evergrande’s stock, a symbol of the crisis in China’s real estate development industry, fell 92% this year. BGY, a component of the Hang Seng Index, also dropped 35%.

Unlike Hong Kong, the Chinese mainland stock market, where internet companies are rarely listed, also showed poor performance due to regulatory fears. The two major indices of the Chinese mainland stock market, the Shanghai Composite Index and the Shenzhen Component Index, rose only 4.8% and 2.67% respectively this year.

On the other hand, Taiwan’s stock market surged this year, backed by a semiconductor boom and record export performance. Taiwan’s representative index, the TAIEX, rose 23.66% this year. On the last trading day of the year, the 30th, the TAIEX even reached an intraday high of 18,291.25, setting a new record.

According to Taiwan’s Ministry of Finance, Taiwan’s exports from January to November this year reached $405.75 billion, setting an all-time record. During this period, exports of semiconductors and other electronic products amounted to $91.56 billion, already surpassing last year’s total of $88.12 billion by a large margin.

This content was produced with the assistance of AI translation services.