(Bloomberg) — Hong Kong’s benchmark stock index is set to enter a correction as growing geopolitical concerns and doubts over the strength of China’s economy spur a rethink on the market’s outlook.

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The Hang Seng Index fell as much as 0.9% on Wednesday, taking its losses from a Jan. 27 peak to about 10%. A sharp three-month surge in the measure has started to reverse in February as investors sought more evidence that the economy’s recovery is on sure footing. Tech and property shares have led the latest decline.

Investors are now debating whether China’s reopening rally can resume after the pullback. Key focus is on the National People’s Congress in March, where the cabinet is expected to unveil a new growth target after the economy expanded just 3% last year, among the slowest paces in half a century. There are also concerns about renewed competition among Chinese e-commerce giants, which may eat into corporate margins just as a years-long crackdown nears an end.

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“It’s reasonable for the market to consolidate after the strong rally from October, and news of stepped-up competitive intensity in e-commerce provides a reason to take profit,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Investors will probably gain better visibility on the recovery, and hopefully confidence, as we go into the earnings season this week.”

READ: China Tech Faces Uphill Battle to Revive Rally: Earnings Watch

Tencent Holdings Ltd., Alibaba Group Holding Ltd. and JD.com Inc. were the biggest drags on the Hang Seng benchmark Wednesday. The Hang Seng China Enterprises Index, which fell into a correction earlier this month, fell more than 1%.

On the mainland, the CSI 300 benchmark slid 0.9%.

Hong Kong shares may move following the city government’s budget release later in the day, with expectations for another round of consumption vouchers and higher taxes for football betting and cigarettes.

The current earnings season is also being scrutinized for business impact from China’s Covid Zero exit. Figures on retail sales and industrial production for the first two months of 2023 are due mid-March, with data so far showing a mixed picture amid tepid sales of cars and homes.

–With assistance from Ishika Mookerjee.

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