Hong Kong stocks close at 2-month low after US markets rattled by election uncertainty

Major stock indices fall in Hong Kong, Shanghai and Shenzhen; Standard Chartered plunges on earnings miss, investigation news

PUBLISHED : Wednesday, 02 November, 2016, 9:29am
UPDATED : Wednesday, 02 November, 2016, 10:10pm

Hong Kong stocks tumbled to their lowest level in over two months on Wednesday following an overnight dip on Wall Street as investors grew anxious amid uncertainties surrounding the tightening US presidential election race and interest rate prospects.

The benchmark Hang Seng Index shed 1.5 per cent to 22,810.50 at the Wednesday close, while the Hang Seng China Enterprises Index, or the H-shares index that tracks mainland blue-chips, fell 1.9 per cent 9,519.87 points.

Market jitters also escalated when banking heavyweight Standard Chartered slumped 7.1 per cent after its third quarter earnings fell short of analyst estimates and the lender said it faced a penalty from the Hong Kong securities regulator.

On the mainland, the Shanghai Composite Index settled its Wednesday trading down 0.63 per cent to 3,102.73 and the CSI300 index declined 0.77 per cent to 3,333.35.

The Shenzhen Component Index headed lower by 0.96 per cent to 10,692.65 while the Shenzhen Composite fell 0.63 per cent to 2,060.05. The Nasdaq-style ChiNext Index lost 1.38 per cent to 2,146.40.

“A case of pre-FOMC (Federal Open Market Committee) and US election jitters gripped cross-asset markets overnight, dampening market enthusiasm and ensnaring trading desks with a severe case of the fidgets, ” said Stephen Innes, a senior trader at Oanda Asia-Pacific, in a note on Wednesday.

“We have been saying all along: the market has been itching to sell risk in the pre-election build up,” he added.

A case of pre-FOMC, US election jitters gripped cross-asset markets overnight, ensnaring trading desks with a severe case of the fidgets...the market has been itching to sell risk in the pre-election build up
Stephen Innes, senior trader, Oanda Asia-Pacific

Global market volatility heightened after new polls pointed to a narrowing gap between Democratic Party candidate Hillary Clinton and Republic rival Donald Trump. With the US presidential election entering the final stretch, the revived Federal Bureau of Investigation probe into Clinton’s emails linked to a private server caused a dramatic turn in the campaign.

On the same day, investors also kept a close eye on the Federal Reserve as the US central bank kicked off its two-day policy meeting that might hint at prospects of a possible rate rise in December.

“For the coming a few days in the lead up to the US election, we believe the overall market sentiment will remain overwhelmingly cautious amid the uncertainties,” said Linus Yip, chief strategist with First Shanghai Securities.

In Hong Kong, Standard Chartered led declines by leading banks such as HSBC, which dropped 1.28 per cent, as well as Bank of East Asia, which slumped 2.20 per cent. Among the most heavily-traded stocks, China Construction Bank shares ended a two-day winning streak with a 2.42 per cent fall on Wednesday.

However, gold miners rallied after prices for the precious metal jumped to a one-month high, as investors rushed to pour money into what they considered safe-havens.

Zhaojin Mining was among the best performers in Hong Kong, climbing 7.37 per cent to HK$8.45. Zijin Mining advanced 5.67 per cent and China Gold International Resources ended up 5.83 per cent to HK$20.70.

Oil prices, which touched a more than one month low after American Petroleum Institute data reported a larger-than-expected inventory build up, contributed to a sell-off in mainland oil majors, with Sinopec sinking 1.90 per cent and PetroChina down 2.22 per cent.