Hong Kong stocks suffered their steepest drop in 16 years after China disappointed investors by failing to announce new stimulus measures for its struggling economy.
The Hang Seng Index plunged 9.4%, or 2,172.99 points, to 20,926.79, marking its largest decline since the 2008 global financial crisis. Officials provided few additional details on previously announced measures, leaving investors underwhelmed.
While Shanghai and Shenzhen markets surged by more than 10% early in the day as they reopened following a week-long holiday, gains were quickly trimmed after a highly anticipated news conference failed to deliver further specifics or new commitments.
Zheng Shanjie, head of China’s National Development and Reform Commission (NDRC), stated that the government was “fully confident” in achieving its target of around 5% growth for the year—a goal analysts consider optimistic.
This gave traders little incentive to continue a rally that had previously driven Hong Kong, Shanghai, and Shenzhen markets more than 20% higher since the initial measures were announced. By the end of the day, Shanghai closed up 4.6% and Shenzhen 8.9%.
Stephen Innes of SPI Asset Management noted, “China’s market rally has hit a wall, leaving investors deflated.”
