Hong Kong stocks sink below key 30,000 level on HSBC decline, trade tensions

HSBC lost 3.5pc after it posted a 4pc decline in first quarter profit before tax

PUBLISHED : Friday, 04 May, 2018, 9:29am
UPDATED : Friday, 04 May, 2018, 10:51pm

Hong Kong’s benchmark index sank below its key 30,000 level on Friday, dragged by declines in HSBC which reported lower than expected earnings, amid ongoing worries over the US-China trade dispute.

Losses in the Hang Seng Index widened in the afternoon, finishing the day 1.28 per cent lower to 29,926.50 points, while the Hang Seng China Enterprises Index tumbled 1.07 per cent, or 128.24 points, to 11,890.62.

HSBC suffered steep losses in the afternoon, slumping 3.5 per cent to HK$74.95 after it said its first-quarter profit before tax declined 4 per cent on the year to US$4.755 billion, which was below consensus estimates.

The bank also announced on Friday that it would lift its US dollar deposit rate to 0.1 per cent from 0.001 per cent. The last upwards adjustment was made on 21 May 2009. Analysts have warned that banks would face a squeeze in their profit margins from increased competition for household deposits. Hong Kong interest rates are climbing after the intervention by the Hong Kong Monetary Authority in April to defend the local currency’s peg to the US dollar.

Hang Seng Bank lost 2.1 per cent to HK$196.50 and China Construction Bank shed 1.1 per cent to HK$7.99.

Among insurers, Ping An Insurance slid 1.1 per cent to HK$74.85 and AIA Group fell almost 2 per cent to HK$68.

Ping An Good Doctor, China’s largest online medical services app, erased earlier gains in its debut trading, after raising US$1.1 billion last week in Hong Kong’s biggest initial public offering of 2018 to date. It closed flat at its HK$54.80 IPO price, after jumping as much as 7 per cent in initial trading.

BYD dropped 3.4 per cent to HK$50.65 and Geely Auto declined 2.8 per cent to HK$20.90.

The US and China on Friday wrapped up their first round of trade talks in Beijing with no breakthrough, agreeing only to more dialogue to ease tensions.

Analysts have held little expectations of a resolution from the negotiations, though a package of short-term Chinese measures could delay a US decision to impose tariffs on about $50 billion worth of Chinese exports.

The official Xinhua news agency reported after the markets closed that both parties exchanged opinions and reached consensus regarding expanding US exports to China, bilateral service trade and protection of intellectual property.

“We remain cautious over the broad equities market because of the ongoing US-China talks," said Qiu Zhicheng at ICBC International.

Ping An Good Doctor jumps as much as 7pc on trading debut after raising US$1.1 billion in biggest IPO this year

In mainland China, the Shanghai Composite Index eased 0.32 per cent at 3,091.03, while the CSI 300 Index lost 0.49 per cent. The Shenzhen Component Index fell 0.31 per cent to 10,426.19 and the Nasdaq-style ChiNext Index was 0.65 per cent lower at 1,814.85.

China Merchants Bank shed 1.9 per cent to HK$28.74 yuan, Bank of Nanjing lost 1.9 per cent to 8.45 yuan and China Construction Bank was 1.5 per cent lower to 7.34 yuan in Shanghai.

Guangdong Liantai Environmental Protection fell 2.3 per cent to 16.81 yuan and Shanghai Environment (Group) lost 1.6 per cent to 17.80 yuan.

Shanghai Kaichuang Marine International slipped 2.9 per cent to 13.25 yuan, China Hainan Rubber Industry Group fell 1.1 per cent to 5.40 yuan