Hong Kong stocks retreat on stronger dollar and falling oil prices

Hong Kong markets ended fractionally lower on Thursday with fluctuating oil prices and continued dollar strength hurting Asian sentiment ahead of US Federal Reserve chair Janet Yellen’s testimony to Congress on the economic outlook.

The Hang Seng Index closed 0.08 per cent lower at 22,262.88, while the Hang Seng China Enterprises Index fell 0.38 per cent, or 36 points, to 9,326.54.

Investors have been watching the strengthening US dollar, which has surged to a near 14-year high against a basket of currencies, dragging the Hang Seng into a downward trajectory since the US election.

“The strong US dollar worries investors over capital outflows from Asia markets,” said Hanna Li Wai-han, a strategist at UOB Kay Hian. “The capital outflow concerns will continue to haunt Hong Kong stocks.”

Castor Pang Wai-san, head of research at Core Pacific-Yamaichi International echoed the view, saying that corrections in the market are likely to continue in the near term. “The investor continues to see corrections instead of [seeing the index] already hitting its bottom,” he said.

The most active stock Tencent dropped 1.07 per cent to HK$ 194.80 after China’s second-largest technology giant said its third-quarter net profit grew 43 per cent to 10.65 billion yuan (HK$12 billion), but fell short of the estimated 11.68 billion yuan from a consensus forecast of analysts surveyed by Bloomberg. Pang expects the company will likely follow the correction path of the Hang Seng.