Hong Kong and China stocks lose ground as anxious investors flee to safe-havens, bid up gold, amid global growth fears
Federal Reserve and Bank of Japan leave rates on hold, as the shadow of Britain’s decision on EU membership hangs over global markets
Hong Kong and mainland Chinese stocks closed lower on Thursday, as investors fled equities for safe-haven assets like gold amid fresh worries about economic growth and market turmoil. The US and Japanese central banks both kept monetary policy unchanged and signalled caution amid uncertainty ahead of Britain’s vote on EU membership next week.
On the mainland, the benchmark Shanghai Composite Index pulled back after gains in the previous session, closing down 0.5 per cent or 14.39 points at 2,872.82. Hong Kong’s benchmark Hang Seng Index took a harder hit, tumbling 2.1 per cent or 429.10 points to close at 20,038.42.
“The stock markets in Hong Kong and the mainland are likely to continue to be soft this week as there are still a lot of uncertainties,” said Ben Kwong Man-kwong, executive director and head of research of KGI Asia.
“We know there will be an interest rate rise but we do not know when it will come. Then there are still uncertainties over whether Britain would vote to stay in or leave the EU in the referendum on June 23,” he added.
For other key indices, Hong Kong’s Hang Seng China Enterprises Index, or H-shares index, declined 2.3 per cent or 199.78 points to 8,409.81. Mainland China’s CSI300 lost 0.7 per cent or 21.7 points to 3,094.67. The Shenzhen Composite Index ended 0.2 per cent or 4.43 points lower at 1,885.44. The Nasdaq-style ChiNext Index erased 1.3 per cent or 27.38 points to finish at 2,101.42.
Elsewhere around the region, major stock indices mostly suffered. Japanese shares fell heavily after the Bank of Japan held off from expanding monetary stimulus, causing the yen, traditionally regarded as a safe-haven currency, to surge against the US dollar to its highest level in nearly two years. The US Federal Reserve on Wednesday also kept interest rates unchanged and signalled a slower pace of future rate hikes, citing uncertainties in the global economy and concerns about a pending vote by Britons on EU membership next week. The Fed officials also lowered their projections for US growth in 2016 to 2 per cent from 2.2 per cent.
“The worrying drop in non-farm payrolls employment last month and concerns about the upcoming Brexit vote appear to have driven this dovish tone [of the Fed],” said Angus Nicholson, an analyst for IG Group.
Gold miners were higher in Hong Kong and China, as August gold climbed to US$1,311.9 an ounce as of 5:45pm in Hong Kong, up 1.5 per cent from Wednesday’s close of regular trading in New York. Gold futures for August delivery settled at US$1,288.3 an ounce overnight, marking its sixth straight advance.
Gold miner Zijin Mining Group was limit-up 10 per cent to close at 3.48 yuan in Shanghai. Its Hong Kong-listed shares also soared 8.7 per cent to HK$2.49. Rival Shandong Gold Mining leapt 8 per cent to 38.7 yuan in Shanghai, and Zhongjin Gold jumped 5.6 per cent to 11.31 yuan.
Oil stocks tanked after crude futures settled lower overnight in New York for a fifth straight session. Refining giant Sinopec fell 1.3 per cent to 4.68 yuan in Shanghai, while its Hong Kong-traded shares dropped 2.8 per cent to HK$5.16. PetroChina saw its Shanghai and Hong Kong stocks down 0.7 per cent and 2.3 per cent respectively. Offshore oil producer Cnooc gave up 3.5 per cent to HK$9.11 in Hong Kong.
Other market movers included Disney-related shares, which pulled back from recent gains on the opening day of the Shanghai Disney Resort.
Shanghai Jinjiang International Hotels Development slid 5.4 per cent to 36.59 yuan, Shanghai Lujiazui Finance & Trade Zone Development shed 5.3 per cent to 24.37 yuan and Shanghai Jin Jiang International Industrial Investment lost 5.1 per cent to 32.34 yuan.
Combined turnover for Shanghai and Shenzhen markets reached 594 billion yuan, slightly up from 573 billion yuan on Wednesday. In Hong Kong, about HK$63 billion worth of shares changed hands, compared with HK$59 billion in the previous session.
With additional reporting from Enoch Yiu.