Hong Kong and China stocks drop as concerns about trade war resurface
- US President Donald Trump says he will go ahead with his plan to increase tariffs on Chinese imports if he fails to make a deal with Beijing at the G20 meeting
- Gene-related stocks fall after a Chinese researcher’s experiment involving two children provokes backlash and a government investigation
Stocks in Hong Kong and China both fell on Tuesday on concerns that the world’s two largest economies will fail to reach any agreement on resolving the trade war at the G20 summit later this week.
The Hang Seng Index dropped 0.2 per cent on Wednesday and the Shanghai Composite Index slipped 0.04 per cent. Biotech companies linked to gene testing and sequencing slumped in the two markets after scientists criticised a Chinese researcher for altering the genes of twin babies and the government started a probe.
The sentiment on the broader market was damped as US President Donald Trump said in an interview with The Wall Street Journal that he will probably move ahead with the plan to increase tariffs on US$200 billion of Chinese goods and levy the duty on the remaining imports, should he not be able to strike a deal in the meeting with Chinese President Xi Jinping on Friday in Argentina. Traders will also closely watch Wednesday’s speech by Federal Reserve Chairman Jerome Powell for any hint of a slowing in the pace of interest rate increases.
“The market is back to the cautious mood and the chance is low that any real progress will be made in the G20 meeting,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Even a best-case scenario will have a neutral impact on the market.”
The Hang Seng Index slid 44.22 points to 26,331.96. The Shanghai Composite Index fell 1.13 points to 2,574.68 for a fourth straight day of declines.
Harmonicare Medical Holdings sank as much as 8.2 per cent before closing almost 1 per cent higher at HK$2.22 in Hong Kong. The operator of 17 maternal and child hospitals in China was said to be the place where He Jiankui, the researcher from a university in Shenzhen, conducted the controversial gene experiment. China’s health commission has ordered an investigation into the event.
BGI Genomics shed 3 per cent to 56.87 yuan in Shenzhen and Vcanbio Cell & Gene Engineering sank 3.2 per cent to 17.61 yuan in Shanghai.
Babytree Group, China’s largest parenting website, added 1 per cent to HK$6.87 on the first day of trading in Hong Kong. The company slashed the amount of capital it had planned to raise in its initial public offering by up to 70 per cent due to the stock market turmoil.
Tingyi Cayman Islands Holdings, China’s largest food and beverage producer, tumbled 18 per cent to HK$10.48 after saying third-quarter sales decreased 4.2 per cent from a year earlier. Bank of America UBS Group cut their ratings on the stock, while Morgan Stanley lowered its price target by 28 per cent.
Telecom stocks jumped in the mainland on expectations that the government will soon issue to phone operators the licenses for 5th generation wireless networks. Guangdong Eastone Century Technology surged by the 10 per cent daily limited to 4.79 yuan in Shenzhen and Shenzhen Kexin Communication Technologies rallied by the same magnitude to 12.73 yuan.