Hong Kong stocks fall, tripped by a weak yuan, but gold shares rise after bullion’s record high prices

The yuan currency’s drop to near five month lows pressures Hong Kong stocks with investors also cautious ahead of trade data

Gold stocks surged after bullion prices were boosted by demand for the safe-haven metal amid geopolitical tensions

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General view of Hong Kong Exchange Square in Central where the city’s stock market is located. Photo: Jelly Tse.

Published: 10:46am, 12 Apr 2024Updated: 5:39pm, 12 Apr 2024

Hong Kong stocks dropped by the most in five weeks pressured by weakness in the Chinese yuan, which hovered around a five-month low, and trade data showing a contraction in exports from the world’s second-largest economy.

The Hang Seng Index fell 2.2 per cent to 16,721.69 at close, but ending the week little changed. The Hang Seng Tech Index dropped 1.8 per cent and the Shanghai Composite Index slipped 0.5 per cent.

Property developer Longfor Group Holdings plunged 8.6 per cent to HK$9.41 and its peer China Overseas Land and Development dropped 4 per cent to HK$11.60 on concerns that the property market’s woes will linger. Alibaba Group Holding fell 3.4 per cent to HK$71.65, giving up some of the gains posted earlier this week from morale-boosting comment by its two founders. Chinese sportswear Li Ning sank 4.4 per cent to HK$19 on jitters about weak domestic demand.

The onshore yuan was trading around 7.2366 to a US dollar, close to its weakest level since November. The depreciation came after the Japanese yen weakened to a 34-year low against the US currency, putting more pressure on Beijing to devalue its currency to boost the competitiveness of its exports.

“Yuan’s weakness and the mediocre macro data will have a psychological impact on investors, particularly overseas investors that adopt a top-down strategy,” said Wu Kan, an investment manager at Soochow Securities. “What we need to closely watch going forward is the first-quarter earnings reports and that will matter more to the direction of the market.”