Chart of the day: Currency woes cloud Hong Kong stocks
The persistent weakness in the Hong Kong dollar has dealt a blow to sentiment in the city’s stock market. Concerns are growing among investors over tightening liquidity after the intervention by the Hong Kong Monetary Authority seems to have failed to check the currency’s depreciation against the US dollar, offsetting optimism about continued earnings growth and relatively low valuations. The city’s de facto central bank has bought HK$13.25 billion (US$1.69 billion) in Hong Kong dollars over the past three sessions as the currency hit the lower end of its trading range at 7.85 per greenback, a level that has not been touched since 2005. Even as Hong Kong stocks are now almost a fifth cheaper than their A-share counterparts, based on a gauge tracking the price gap between the two markets, that is still not enough to lure mainland traders. The Stock Connect scheme yesterday saw net sales of the city’s equities for the third consecutive day.