Hong Kong Stock Storm: A Sharp Decline after Stimulus-Fueled Rally

Hong Kong stocks plummeted over 3% following a six-session rally, driven by Chinese stimulus measures. Investors booked profits particularly in property, finance, and tech sectors. Experts warn of a potential bubble with Beijing's policy decisions hanging in balance, complicating future fiscal strategies.

Hong Kong stocks took a nosedive on Thursday, retreating sharply after a robust six-session run prompted by an influx of Chinese stimulus measures. Investors scrambled to book gains, principally from high-performing sectors including property, finance, and technology.

The benchmark Hang Seng Index plunged 3.12% to 21,743.18, erasing some of Wednesday's impressive gains where it climbed 6%, marking its most successful session since November 2022. Chinese H-shares listed in Hong Kong experienced a 3.44% decline, while the Hang Seng Tech Index slipped 5.2%.

UBS indicated signs of profit-taking were evident, with sales focusing on select Hong Kong real estate and financial stocks. The Hang Seng had surged over 30% from a September low prior to Thursday's contraction. Analysts express concern over parallels with the 2015 boom and bust, as the market fervor could complicate Beijing's future economic policy direction.

(With inputs from agencies.)