Hong Kong and mainland stocks knocked for modest losses at the lunch hour break

Hang Seng Index and Shanghai Composite Index each drift 0.25 per cent lower in morning session

PUBLISHED : Tuesday, 14 June, 2016, 9:26am
UPDATED : Tuesday, 14 June, 2016, 12:57pm

Hong Kong and mainland stock markets extended losses at midday on Tuesday after the US and European markets fell overnight.

The Hang Seng Index closed the morning session at 20,461.57 at lunch break, down 0.25 per cent or 51.42 points, while the Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, fell 0.19 per cent to 8,603.24.

Among sectors, automotives fell 0.67 per cent, mining stocks were down 0.58 per cent and white goods, or home appliance companies, dropped 0.47 per cent.

Among the blue chips, Hong Kong Exchanges and Clearing was down 0.16 per cent to finish the morning session at HK$183.1, HSBC was unchanged at HK$47.90 and China life was down 1 per cent to HK$16.44.

The Shanghai Composite Index fell 0.25 per cent to 2,826 at the lunchtime break. The CSI300 was down 0.25 per cent to 3,058.70. The Shenzhen Composite Index was down 0.66 per cent to 1,815.33 and ChiNext dropped 0.93 per cent to 2,035.56.

In Shanghai, education stocks rose 1.17 per cent, agricultural stocks were up 0.17 per cent. Leading the decline, the technology sector was down 1.32 per cent, while miners fell 0.13 per cent.

Both Hong Kong and mainland stocks fell sharply on Monday amid polls showing the exit camp has the lead among British voters ahead of next week’s referendum on remaining in the European Union.

Louis Tse Ming-kwong, director of VC Brokerage, said the markets in Hong Kong and the mainland would likely continue to fall on Tuesday amid uncertainties whether index compiler MSCI will opt to include mainland shares in its indexes, as part of an annual review due to be announced on Wednesday.

“The MSCI decision on A-shares inclusion will have a big impact on the Hong Kong and mainland stock markets. Investors are likely to sell further amid the uncertainties about the result,” Tse said.

Tse believes the market will bounce back after the MSCI announcement. “If A-shares would be included into the MSCI indices, it would support the Hong Kong and mainland stocks to go up but the rally would not be too strong,” he said.

The yuan remain flat on Tuesday morning after People’s Bank of China set the mid point of the yuan against the US dollar at 6.5791, stronger by 14 basis points, or 0.02 per cent. This came after the offshore yuan on Monday fell to its lowest level in four months.

The US major indexes ended lower on Monday. The Dow Jones Industrial Average was down 0.74 per cent or 132.86 points to close at 17,732.48, while the S&P 500 closed 0.81 per cent lower at 2,079.06. The Nasdaq fell 0.94 per cent to close at 4,848.44.

Analysts said investors remain focused on the British referendum next week, and that a decision to pull out could trigger a wave of disruption among global markets.

Investors are also looking ahead the US Federal Reserve’s two-day policy meeting due to conclude on Wednesday. Fed Chairwoman Janet Yellen is slated to hold a press conference following the FOMC decision at 2pm Eastern Standard Time on Wednesday.

Elsewhere Around Asia on Tuesday, Japan’s Nikkei 225 dropped 1.42 per cent or 227.28 points to trade at 15,791.90.

This story has been amended to correct the figure for Monday’s trade on Nasdaq.