Hong Kong, China stocks fall anew ahead of US announcement of tariffs on Chinese goods
Hang Seng Index posts its biggest weekly drop in two months while the Shanghai index falls to 20-month closing low
Hong Kong’s stock market posted its biggest weekly drop in over two months on Friday while the Shanghai Composite Index fell to a 20-month closing low, ahead of an expected announcement by US President Donald Trump of a revised list of tariffs worth about US$50 billion on Chinese goods.
The list will contain 800 product categories, down from 1,300 previously, Reuters reported, citing sources familiar with the list. The Chinese government’s top diplomat, State Councillor Wang Yi, said his country was prepared to respond if Trump went ahead with the tariffs.
The Hang Seng Index fell 0.4 per cent, or 130.68 points, to 30,309.49 on Friday, taking weekly losses to 2 per cent in the worst week since March 23. The Hang Seng China Enterprises Index fell 0.7 per cent or 80.52 points to 11,970.18.
“Stocks are facing pressure because there is a lot of market nervousness before the release of the tariff list on China as well as because of the weakening Hong Kong dollar,” said Linus Yip, chief strategist for First Shanghai Securities.
A rebound in the US dollar and sliding emerging market currencies after an interest-rate increase by the US Federal Reserve weighed on the Hong Kong dollar, which slipped to 7.8493 against the US dollar, triggering concerns that the Hong Kong Monetary Authority may have to intervene to prop up the currency, which in turn would reduce liquidity in the banking system.
The authority is obliged to prevent the currency from trading outside a band of between 7.75 and 7.85 to the US dollar under the city’s linked exchange rate system.
Among the main losers in Hong Kong, Chinese financials fared poorly. China Construction Bank lost 1 per cent to HK$7.79, Industrial and Commercial Bank of China was 0.8 per cent lower at HK$6.33 and Agricultural Bank of China fell 0.7 per cent to HK$4.01.
Internet giant Tencent Holdings slipped 0.5 per cent to HK$410 and lens maker Sunny Optical lost 1 per cent to HK$164.
Oil companies also fell ahead of an OPEC meeting next week as two of the world’s biggest producers, Saudi Arabia and Russia, indicated they were prepared to increase output. PetroChina decreased 1.3 per cent to HK$6.04, CNOOC dropped 1.1 per cent to HK$12.94 and Sinopec Corp fell 1.1 per cent to HK$7.2.
Elsewhere, sporting goods makers continued their declines after Hong Kong-based research firm GMT’s Wednesday report questioning the accounting of nine of 16 listed Chinese sports brands based in Fujian province.
Anta Sports Products slid 4.8 per cent to HK$43, Li Ning fell 1.1 per cent to HK$9. 08, Xtep International Holdings dropped 3 per cent to HK$5.48 and 361 Degrees International sank 5.1 per cent to HK$2.41.
Minsheng Education Group dropped 0.5 per cent to HK$2.12, falling further after a report by short seller Muddy Waters that accused its industry peer and one of the China’s largest private education services providers, TAL Education, of inflated profit figures. TAL has denied the report.
In mainland China, concerns over increasing number of defaults in the bond market added to the worries about a US-China trade war.
The Shanghai Composite Index fell 0.7 per cent, or 22.26 points, to 3,021.90, marking its lowest closing level since October 2016. The CSI 300, which tracks large caps listed in Shanghai and Shenzhen, eased 0.5 per cent, or 19.94 points, to 3,753.43.
The Shenzhen Composite Index lost 1.8 per cent, or 30.24 points, to 1,691.65 and the Nasdaq-style ChiNext fell 1.9 per cent, or 31.66 points, to 1,641.66.