Hong Kong stocks sink as taper risks reignite bond market sell-off, China watches with caution on policy fallout

Hang Seng Index and Shanghai Composite fell by more than 1 per cent after US equities sold off overnight on taper concerns

Swings in Hong Kong stock prices are now the most volatile since June, just before China imposed the national security law in the city

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Stocks slip in Asia trading as taper risks revived and US 10-year bond yield advances to 14-month high. Photo: Reuters

Published: 10:06am, 19 Mar 2021Updated: 4:47pm, 19 Mar 2021

Hong Kong and mainland China stocks tumbled with equities in the Asia-Pacific region as taper risks dominated trading sentiment and uncertainty about the inflation outlook triggered another bout of bond market sell-off.

The Hang Seng Index sank 1.4 per cent to 28,990.94 at the close, snapping a four-day winning streak and trimming this week’s advance to 0.9 per cent. The Shanghai Composite Index retreated 1.7 per cent from a two-week high and capped a fourth straight weekly slide. Senior officials from Beijing and Washington met in Alaska in tense mode for their first talk since President Joe Biden took office.

Technology and energy companies led losses in Hong Kong. WuXi Biologics, Alibaba Health Information and PetroChina declined by more than 4 per cent. Old-economy stocks held onto gains, with CK Asset and Hong Kong & China Gas rising by at least 1.2 per cent. Xiaomi Corp added 0.2 per cent after local media 36kR.com said the smartphone maker may formally establish an electric vehicle project.

Benchmarks in Australia, South Korea and Japan dropped 0.6 to 1.4 per cent, and crude oil futures tumbled more than 7 per cent in New York. European stocks also fell while futures on US equities indicate the S&P 500 and Nasdaq gauges may rebound from their overnight slump.

Hong Kong’s US$7.2 trillion stock market has lost 6.7 per cent since its benchmark index hit a 20-month high on February 17. Investors are now facing the wildest price swings since June, preceding China’s decision to impose a national security law on Hong Kong.

In the US, benchmark 10-year Treasury yield jumped as much as 11 basis points to 1.75 per cent, the highest level since January last year and 30-year yield climbed 3 basis points to 2.45 per cent, a level unseen since July 2019.