Hong Kong Stock Market Slumps as China Worries Deter Investors

Hong Kong's stock market has shrunk significantly, with plunging turnover and new listings drying up. Its benchmark Hang Seng index has fallen over 11% this year.

The market's fortunes are tied to China's economic prospects, which remain weak due to property sector woes, high debt, and sluggish demand. Foreign investors are reducing exposure on these concerns.

Daily turnover in HK has halved from 2021. Fund managers say this is due to perceptions of worsening Chinese economy and rising geopolitical risks.

The trading slump has been dire for Hong Kong's hundreds of small brokerages, with a record 47 shutting down last year. Participants say market sentiment is even worse than during 2008 global financial crisis.

Attracting new money into HK market is difficult. Local investors are discouraged, while younger traders prefer US stocks. Reversing the market's decline requires an improvement in China's economic outlook.