Hong Kong and China stocks decline for second day over concerns US trade war will hit growth

PUBLISHED : Thursday, 26 April, 2018, 9:13am
UPDATED : Thursday, 26 April, 2018, 11:05pm

The Hong Kong and China stock markets declined for a second day on Thursday, over concerns that China’s economic growth would take a hit following reports the United States was investigating Huawei Technologies for breach of sanctions related to Iran.

In Hong Kong, the benchmark Hang Seng Index dropped by 1.06 per cent, or 320.47 points, to 30,007.68. The Hang Seng China Enterprise Index fell by 1.20 per cent, or 144.94 points, to 11,949.38.

Technology stocks slid as trade war jitters resurfaced and weighed on the sector, after The Wall Street Journal reported that Chinese telecom equipment giant Huawei was under investigation by the US justice department for the breach of sanctions related to Iran.

Less than two weeks ago, the US banned ZTE, Huawei’s main domestic rival, from buying key American technology for seven years for similar reasons.

“Sentiment has soured as the market is clouded by the fear of a trade war,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai.

Information technology outsourcing company Chinasoft International plunged by 15.86 per cent to HK$5.57. It owns an IT services company with Huawei. BOE Technology Group lost 4.9 per cent to HK$4.27.

Index heavyweight Tencent also fell by 1.19 per cent to HK$382.2 (US$48.7), its lowest in the past four months.

Shares in Chinese carmakers fell after China said it was considering proposals to cut import duties on passenger cars by about half. Geely Auto lost 2.36 per cent to HK$20.70, Harmony Auto fell by 1.57 per cent to HK$4.40 and BYD moved down by 0.60 per cent to HK$58.00.

On the mainland, the Shanghai Composite Index fell by 1.38 per cent, or 42.94 points, to 3,075.03. The blue-chip CSI 300 Index slumped by 1.91 per cent, after index heavyweight Gree Electric Appliances, China’s biggest maker of air conditioners, said it would not pay a dividend for the first time in over a decade.

“Gree’s issue has further added to the bad sentiment caused by trade war fears and amplified selling,” said Wang.

Gree Electric slumped by 8.97 per cent to 45.58 yuan in Shanghai after the company said it would reserve capital to expand capacity and invest in the integrated circuit industry instead of paying dividends to shareholders. Its profit jumped by 45 per cent last year, the company said in an exchange filing.

Other blue chips also fell: Shanghai Flyco Electrical Appliance slumped by the daily 10 per cent limit to 51.75 yuan; Liquor distiller Sichuan Swellfun slid by 5.74 per cent to 40.10 yuan; and Wuliangye Yibin, one of China’s largest liquor makers, also shed 3.24 per cent to 69.10 yuan.