Hang Seng Index

Hong Kong stocks slammed as China calls off planned trade talks with Washington

PUBLISHED : Monday, 24 September, 2018, 6:31pm
UPDATED : Monday, 24 September, 2018, 6:31pm

Hong Kong stocks tumbled on Monday after China cancelled trade talks with the US and accused it of “bullying” trade tactics, ending a four-day winning streak.

The benchmark Hang Seng Index fell 1.6 per cent, or 454.19 points, to close at 27,499.39. The Hang Seng China Enterprises Index declined 1.8 per cent, or 199.61 points, to 10,827.52.

China called off a planned visit to Washington by vice-premier Liu He on Monday, as reported by the Post, in a move that quashed hopes for resumed negotiations between the world’s two largest economies.

Stock markets in Shenzhen and Shanghai were closed for a public holiday on Monday and will reopen Tuesday. Markets in Hong Kong will be closed on Tuesday for a public holiday and reopen on Wednesday.

Beijing also released a 36,000-word white paper on the bilateral trade frictions through the official Xinhua News Agency on Monday, which accused the US of seeking “economic hegemony” and “intimidating” other countries through economic measures including tariffs.

“The market recovered in the past two weeks on the news that US has invited China for trade talks,” said Kingston Lin King-ham, director of securities brokerage AMTD.

“Now it turns out that the bilateral relationship shows no sign of improving and is even worsening so the market naturally trended lower.”

US-China trade war: visit to Washington by Beijing’s top economic adviser Liu He cancelled, source says

Lin said that the Hang Seng Index could dive below 26,000.

Mainland Chinese financials led the decline. Shares of China Construction Bank, one of the four big state-owned banks, slid 1.7 per cent to HK$6.78. Industrial and Commercial Bank of China dropped 1.7 per cent to HK$5.64, and Bank of China was also down 1.7 per cent at HK$3.46.

Chinese property developers also plunged on the back of reports that mainland regulators were considering scrapping the current pre-sale system that enabled developers to secure funds before project completion. Removing the system means cutting off the most significant funding channels for China’s debt-laden developers.

Officials in the southern province of Guangdong denied they would implement any plan right away on Monday, but fuelled market speculation as they did not rule out the possibility of further consideration.

China accuses United States of ‘bullying’ on trade but calls for cooperation

Country Garden, China’s largest property developer by sales, plunged 5.6 per cent to HK$10.84. China Evergrande was down 3.6 per cent at HK$25.8, and China Resources Land declined 4.8 per cent to HK$27.95.

In other market action, shares of Postal Savings Bank of China, the country’s largest bank by the number of branches, slid 2.8 per cent to HK$4.83.