China and Hong Kong stocks decline on market turbulence spillover concerns, more US tariffs

Hong Kong stocks dropped the most since mid-June on Wednesday, as traders pulled out of risky assets amid concerns the economic and currency woes affecting developing economies will spill over to the former British colony.

The city’s benchmark Hang Seng Index sank by 2.6 per cent at the close for its biggest decline since June 19. The number of shares that changed hands was 17 per cent lower than the bourse’s 30-day average, according to Bloomberg data.

China’s benchmark Shanghai Composite Index also retreated, falling by 1.7 per cent on expectations the Trump Administration will announce tariffs on another US$200 billion worth of Chinese goods as early as this week.

“The trouble that’s brewing up in emerging economies is significantly cutting investors’ risk appetite, and funds are flowing to US dollar-related asset havens,” said Ken Chen, a strategist at KGI Securities in Shanghai. “The Hong Kong market is not immune to this risk-off sentiment.

“The uncertainty of the trade war has also added to worries that China’s fundamentals will deteriorate,” he added.

A slump in the Indonesian rupiah and runaway inflation in the Philippines are adding to the turmoil in developing countries that started with the collapse of the Turkish lira. Equity benchmarks in these two Asian countries slumped on Wednesday – by 1.6 per cent in Manila and 3.9 per cent in Jakarta – after the rupiah tumbled to about a 20-year low and consumer prices in the Philippines rose at their fastest pace in nine years in August. The US Dollar Index, a gauge of underlying risk averseness, traded near a one-year high.