Hong Kong stocks extend downward slide

Hang Seng benchmark on track for its worst annual performance in four years

PUBLISHED : Wednesday, 30 December, 2015, 8:59am
UPDATED : Wednesday, 30 December, 2015, 1:20pm

Hong Kong shares traded lower on Wednesday, extending a slide that has the benchmark index set for its worst annual performance in four years, while mainland Chinese stocks in Shanghai were little changed, as the yuan traded at a five-year low.

At midday on the last full trading session of the year, the Hang Seng index fell 0.46 per cent to 21899.42, while the China Enterprises Index for mainland companies plunged 1.84 per cent to 9608.57. As of Tuesday’s close, the Hang Seng was down 6.8 per cent for the year, reflecting its worst four years since a 20 per cent drop in 2011, when concerns over the break up of the European single currency sent global markets into free fall.

On the mainland, the Shanghai Composite ended flat after mild gains and losses over the course of the morning session, finishing down just 0.07 per cent to 3561.13, The China Securities Index dipped 0.27 per cent to 3751.59.

VC Brokerage director Louis Tse Ming-kwong said Chinese markets were down as a result of the falling yuan exchange rates, as well as low turnover ahead of Friday’s New Year break. Hong Kong’s market will close for the week at midday Thursday, while China markets will close Friday.

“Some people may be hoping it’s going to rebound at the beginning of the new year,” he said. “If you buy today the settlement day will be next Tuesday so there might be some bottom fishing before the end of the day. But they may do it tomorrow during the half session - by the look of it, the market still has room to go down.”

Meanwhile the People’s Bank of China set the US dollar reference rate at 6.4895 prior to the open of trade, down 0.05 per cent, and its lowest level since May 2011.

The offshore yuan was quoted at 6.5929 per US dollar around midday, after earlier declining to 6.5970, its weakest level since January 2011, according to Bloomberg data.

Shenzhen’s Composite Index was among the only bright spot in the morning trade, rising by 0.47 per cent to 2341.25 at the midday close. Wonders Information Co continued down for the second day in a row, after surging over the past few months, to fall 2.35 per cent to 35.36 yuan.

Hong Kong shares of Cnooc were down 0.7 per cent, while Sinopec’s were off 1.9 per cent and PetroChina’s fell 1.2 per cent.

In other action, mainland real estate developer China Vanke’s shares were up 2 per cent. Tencent’s shares were up 0.7 per cent, tracking gains for US online companies Tuesday.

During the New York session, Google, trading under its new listed name, Alphabet, saw its shares rise 1.5 per cent, while online retailer Amazon.com jumped 2.8 per cent, with the shares of both companies ending at all-time highs.

In other US trade on Tuesday, energy prices rebounded amid forecasts for winter storms and colder weather ahead. Light, sweet crude oil futures for February delivery rose US$1.06, or 2.9 per cent, to US$37.87 a barrel on the New York Mercantile Exchange. Energy prices retreated Wednesday morning in East Asia, as the February contract for light, sweet crude fell 68 US cents, or 1.8 per cent, to US$37.19 per barrel on Nymex.

Among the big indexes, the Standard & Poor’s 500 rose 1.1 per cent to 2,078.36, while the Dow Jones Industrials were up 1.1 per cent to 17,720.98, and Nasdaq rose 1.3 per cent to 5,107.94. Major indexes in Paris and Frankfurt saw gains of about two per cent.