Understanding the Market | Why did Hong Kong stocks plummet?
On Monday, January 22nd, the Hong Kong stock market experienced a sharp decline, with the Hang Seng Index falling more than 3% at one point and currently still below 14,900 points. The Hang Seng Technology Index also saw a significant drop of 4%, although the decline has narrowed and it has returned above 3,000 points.
Among them, the real estate sector led the decline, with stocks such as Longfor Group, China Resources Land, and Greentown China all experiencing double-digit percentage drops.
What happened?
According to Reuters, citing sources, China has requested heavily indebted local governments to delay or halt infrastructure projects, as the central government's efforts to stimulate the economy have also made it difficult to control debt risks.
It is reported that in recent weeks, the State Council has intensified efforts to manage the $13 trillion debt of local governments, directly instructing local governments and state-owned banks to delay or halt construction projects in 12 regions nationwide that have completed less than half of their planned investments.
The report indicates that the latest directive targets infrastructure projects such as highways, airport renovations and expansions, and urban rail projects. However, projects approved by the central government or those related to affordable housing are exceptions.