Hong Kong’s benchmark stock index plunges in panic selling as Asia follows US market rout
The sell-off underpins the concern among investors that global central banks will follow the US Federal Reserve in raising interest rates, which would hurt equities holdings.
Hong Kong’s benchmark stock index made its biggest single-day plunge in more than two years, taking the cue from a sell-off across Asian markets as the global meltdown of equities entered its second day.
The Hang Seng Index plummeted by 1,649.80 points, or by 5.1 per cent, to close at 30,959.42 on Tuesday, the biggest point drop since July 8, 2015 during mainland China’s stock market rout. Declines were recorded on every other Asian stock market index except the Laos Composite, which inched up by 0.6 per cent.
Investors were spooked by the 1,600-point overnight loss in the Dow Jones Industrial Average on Monday, the biggest point loss in the history of the New York Stock Exchange’s benchmark. The shake-out, which started last Friday with a surge in the yield on 10-year Treasuries, underpins the concern among investors that global central banks will follow the US Federal Reserve in accelerating their pace of raising interest rates, which would hurt equities holdings.
“Major central banks are turning off the liquidity tap, and you have this bubble which many people are afraid is about to burst,” said Christophe Rieger, Commerzbank’s head of rates and credit research in Hong Kong. “There was this unprecedented support for many years, which people are worried will suddenly dry up.”
“The market sentiment has changed rapidly,” said Stanley Chan, director of research at Emperor Securities. “Investors will be more sensitive now to the bad news. In the short term, the market needs further correction. The market will remain weak before the Lunar New Year holiday” that starts next week, he said.