U.S. Futures Advance, Hong Kong Stocks Stabilize

Market calmer after Monday’s volatile trading

Sept. 21, 2021

U.S. futures rose, suggesting American markets could regain some ground Tuesday after concerns about the Chinese property sector helped fuel a global selloff in the previous session.

Futures tied to the S&P 500, Nasdaq 100 and Dow Jones Industrial Average indexes rose between about 0.5% and 0.7% by early afternoon Tuesday in Hong Kong.

Hong Kong’s flagship Hang Seng Index fell as much as 1.3% in early trading but quickly recouped most of those losses. It stood 0.3% lower by early afternoon. A real-estate-fueled pullback on Monday had helped push the index to its lowest level in nearly a year.

Shares in China Evergrande Group, the heavily indebted Chinese developer whose financial difficulties have concerned investors, dropped another 3.5% to 2.20 Hong Kong dollars a share. That took its year-to-date decline to more than 85%.

Shares in some other large Chinese real-estate groups rose, however, with China Vanke Co. ’s Hong Kong shares adding 1.6% and Country Garden Holdings Co. surging 6.9%. Exchanges in mainland China were closed Tuesday for a public holiday.

Despite the stronger tone compared with Monday’s, investors remain concerned about the knock-on effects of Evergrande’s debt crisis.

“Evergrande is not an isolated incident,” said Dave Wang, a portfolio manager at Nuvest Capital in Singapore. “There are and will be more property developers defaulting. Given the property’s market contribution to the economy, including building and construction activities, markets are pricing in the possible contagion impact,” he said.

Shares in Chinese technology companies—another sector that has found itself in the regulatory crosshairs alongside property—were weak, with the Hang Seng Tech Index dropping 1.5% and food-delivery giant Meituan falling more than 3%.

In U.S. trading Monday, American depositary receipts in e-commerce giant Alibaba Group Holding Ltd. had fallen more than 5% to $151.49, their lowest close in more than two years.

Elsewhere in the region, Japanese stocks caught up with Monday’s selloff, with the Nikkei 225 dropping about 1.8% by early afternoon Tokyo time. Japan’s market had been closed Monday for a public holiday.

The yield on the 10-year U.S. Treasury note rose modestly, to 1.328%, according to Tradeweb.