Trump bans US investments in what he calls Chinese ‘military-controlled’ companies, sending Hong Kong, China markets lower
- Hong Kong’s benchmark Hang Seng Index declined for the third straight day, slipping by 0.05 per cent, while the Shanghai Composite dropped 0.9 per cent
- Losses in Hong Kong’s benchmark were led by China Mobile, a bellwether utility stock on Trump’s executive order
The president “may be tempted to flip over the chess board and leave Biden to pick up the pieces,” said Gabriel Wildau at Teneo Risk Advisory in New York. “The outgoing administration may also be seeking to place Biden in a bind by imposing actions that create chaos but that would be politically difficult for a Biden administration to reverse, since doing so would expose them to criticism that they are soft on China.”
“The People’s Republic of China (PRC) is increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses,” Trump said in a statement.
“Investors are worried about whether Trump will follow up with further measures that would heighten US-China tensions before his term ends,” said Emperor Securities’ research director Stanley Chan, adding that the executive order hurt market sentiments. “Although Trump is nearing the end of his tenure, barring unforeseen consequences, risks remain as to what could happen in the coming two months. We’ll have to see if there are any changes to the executive order once Biden becomes president.”
State-owned construction companies also fell. China Railway Construction Corporation eased 4.1 per cent, while China Communications Construction Company declined 3.3 per cent. Hikvision fell 1.5 per cent on the Shenzhen exchange.
The Hang Seng Index fell as much as 1 per cent before ending the day with a 0.1 per cent decline to 26,156.86 on Friday for its third consecutive day of declines.
The Shanghai Composite Index’s losses continued for a fourth day, dropping 0.9 per cent to 3,310.10 for a weekly loss of 0.1 per cent.
Wang Chen, a Shanghai-based partner at Xufunds Investment Management, said the stocks were only exposed to the risk of being liquidated by some funds.
“When selling is over, investors will realise that the fundamentals of these companies are not going to be hurt. It’s just a matter of liquidity issue and the impact will be quite limited,” Wang said.
Alibaba, the owner of this newspaper, rose 1.6 per cent to HK$257, while Meituan gained 6.6 per cent to HK$305.80.
Rising coronavirus infections and fears of new economic restrictions cast a pall on markets in Asia-Pacific.
Japan’s Nikkei 225 declined 0.5 per cent as new Covid-19 infections rose to record highs in the country, while Australia’s S&P/ASX200 retreated 0.2 per cent.
“Investors could not shake the sentiment-crushing aspects of the continually soaring Covid-19 cases and the unpleasantries of new economic restrictions,” said Stephen Innes, chief global markets strategist at Axi.