Hong Kong stock in torment as mainland traders exit, Beijing endorses national security law

Name: Hong Kong is no longer autonomous from China, US determines
Uploaded: 2020-05-28T02:05:09.000Z
Duration: 1 min 56 s
Description: Hong Kong is no longer autonomous from China, US determines

Local stock market is caught in escalating US-China tensions after decisions on Hong Kong autonomy, Huawei CFO’s case

Major markets across Asia-Pacific continue to rally on recovery hopes, stimulus

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People walk past an electronic board showing the falling Hang Seng Index in Central, Hong Kong. Traders are tormented on market direction as Beijing endorses a resolution for a security law for the former British colony. Photo: Felix Wong

Zhang Shidong

Published: 10:05am, 28 May 2020Updated: 5:09pm, 28 May 2020

Hong Kong stocks slipped in see-saw trading as mainland traders unwound positions amid widening US-China political rifts, with Beijing endorsing a proposal to impose a controversial security law for the city.

The Hang Seng Index dropped 0.7 per cent, or 168.6 points, to 23,132.76 at the close, trimming an intraday loss of as much as 2.2 per cent. The Shanghai Composite Index closed 0.3 per cent higher. Hong Kong’s currency and the yuan both strengthened against the US dollar.

The limp contrasted with more than 1 per cent rally in Japan and Australia, as global stocks continue to rebound from epic sell-offs. More businesses are reopening across Asia on optimism the pandemic is past its peak. Hong Kong’s stock market, however, continued to be hamstrung by rising political risks.

Delegates at the National People’s Congress endorsed a proposal for a security law in Hong Kong at the end of the annual legislative meeting. This could draw more international backlash. It follows the US decision on Wednesday to certify that Hong Kong has lost its autonomy from China.

“Whoever's buying Hong Kong today has to take a longer term view, and whoever selling and shorting is taking a very short-term view,” said Khiem Do, head of Greater China investments in Hong Kong at Baring Asset Management. “That is the fight being waged on the Hong Kong market over the last few days.”

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Hong Kong is no longer autonomous from China, US determines

Some 33 of the 50 members in the Hang Seng Index declined, while 15 advanced. CSPC Pharmaceutical and Sino Biopharmaceutical were the biggest decliners, falling 10 per cent and 4.9 per cent respectively. CSPC declined on expectations prices of one of its major drugs will not be included in the bulk procurement by the Chinese government.

Tencent Holdings and HSBC were among the biggest drag on the Hang Seng Index, accounting for more than half of its loss. The Chinese social media juggernaut lost 2.8 per cent to HK$408.20 and HSBC shed 0.9 per cent to HK$37.