Hong Kong stocks tumble to one-month low, following 4-day slump in mainland market

PUBLISHED : Wednesday, 19 April, 2017, 9:02am
UPDATED : Wednesday, 19 April, 2017, 6:09pm

Hong Kong’s benchmark stock index fell to a one-month low on Wednesday, led by declines among casino operators, property developers and energy companies, dragged down by four days of sell-off in the mainland Chinese exchanges over tightened regulatory scrutiny of financial malfeasance in banking and insurance.

The city’s benchmark Hang Seng Index slid 0.4 per cent, or 98.7 points, to 23,825.88, a level unseen since March 15. The Hang Seng China Enterprises Index, which tracks the so-called H shares sold by Chinese companies, declined 0.6 per cent to 9,983.7, the lowest level in more than two months.

Trading turnover increased 2 per cent to HK$72.2 billion.

“Hong Kong’s market continues to be affected by the negative sentiment on the mainland, as banking regulators tightened their supervision in shadow banking and in the wealth management business,” said Victor Au, chief operating officer at Delta Asia Financial Group. A 3 billion yuan scandal at Minsheng Bank, the country’s first private-sector lender and usually regarded as a bellwether of competitive and competent management, “added to investors concerns,” he said.

China’s Minsheng Bank sees investor trust vanish – along with 3b yuan

Mainland stock indexes have dropped for four consecutive days to close at the lowest levels in more than two months, as the fall in financial and property sectors offset a slight rebound in stocks related to the Xiongan New Area and recently listed stocks.

The Shanghai Composite Index lost 0.8 per cent to 3,170.7, the lowest close since February 8. The CSI 300 Index, which tracks large companies listed in both Shanghai and Shenzhen, fell 0.5 per cent to its one-month low of 3,445.9.

The Shenzhen Component Index shed 0.6 per cent to 10,348.4, with the ChiNext index falling 0.2 per cent to 1,845.4.

Shares of China Minsheng Banking Corp fell by 1 per cent in Shanghai and Hong Kong, after it disclosed that a Beijing branch manager was under investigation over financial misconduct.

“The Hang Seng is unlikely to regain 24,000 before Shanghai Composite recovers to the 3,200 level,” said Au.

Geopolitical concerns shifted from North Korea to Britain as Prime Minister Theresa May called for an earlier-than-expected election.

“Investors are digesting the news. In fact May took a smart move as the chance for winning the election is huge and it will give her a mandate to deal with the Brexit issue in the coming years,” Au said.

Among big movers, Geely Automobile Holdings outperformed its blue-chip peers to close 6.4 per cent higher at HK$11.3, following the start of the Shanghai Auto Show. AAC Technologies, component provider for iPhone, surged 5.1 per cent to HK$100.3.

Casino operator Sands China lost 2.5 per cent to HK$35.6, Galaxy Entertainment, another casino operator, fell 2.4 per cent.

Air China was the biggest loser among H shares, ending 3.3 per cent down to HK$6.46 after a report by Morgan Stanley recommending investors to sell H shares of mainland airline operators.

On the mainland, Jiangsu Zhangjiagang Rural Commercial Bank, listed in Shenzhen in January, jumped 10 per cent to the daily limit to 17.9 yuan. The stock had fallen 16 per cent in the previous three days as China Securities Regulatory Commission vowed to regulate speculative or manipulated trading in recently listed stocks or those paying exceptionally high bonuses.

Similar concept stocks like Eurocrane China Co and Chongqing Construction Engineering Group also bounced up by their 10 per cent daily limits.