Hong Kong stocks halt best run since March on surprise Fed tapering talk as bitcoin roils cryptocurrency holders

Hang Seng Index fell after Fed minutes showed officials were ready to discuss about tapering at some point under sustained growth

Oil producers, casinos led losses while Chong Hing Bank surged on going-private offer; Meitu slid amid swings in cryptocurrency

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Stock prices and the Hang Seng Index chart are seen on a big screen in Central, Hong Kong. Photo: Shutterstock Images

Published: 10:51am, 20 May 2021Updated: 5:01pm, 20 May 2021

Hong Kong stocks fell, reversing a three-day advance on concerns about policy tightening after the Federal Reserve indicated some officials may be ready to talk about tapering if the US economy sustains its growth momentum. Swings in bitcoin prices hit selfie-king Meitu and other cryptocurrency-linked stocks.

The Hang Seng Index declined 0.5 per cent from a one-week high to 28,450.29 on Thursday. Local stocks rose for three days, the best run since March, before a holiday on Wednesday. The Shanghai Composite Index lost 0.1 per cent to 3,506.94, extending a drop from an 11-week high.

Oil producers were loss leaders, with PetroChina and Sinopec tumbling by 4.6 per cent and 3.3 per cent respectively. Casino operators also weakened amid concerns about the worsening pandemic. Galaxy Entertainment dropped 2.1 per cent while Sands China fell 1 per cent.

Minutes from the Fed’s policy meeting in late April, which were released on Wednesday, showed that some officials said it will be “appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” JPMorgan Chase analysts cited by Bloomberg viewed the intent as a surprise.

“The Fed’s changing tone on asset purchases have affected the Hong Kong market to some extent, which will cause Treasury yields to continue to rise,” said Ernie Hon, head of research at Essence International Securities in Hong Kong. “The Fed could scale back those asset purchases after this year, and any drop in stock prices will be gradual instead of abrupt.”

Meitu, a Chinese beauty app maker, fell 1 per cent to HK$1.98, bringing the losses this month to more than 17 per cent as cryptocurrency supporters continued to be whipsawed by wild swings in digital coins amid warning from China. Electric carmaker Tesla, which bought US$1.5 billion worth of bitcoin in February, has seen its stock slide 21 per cent this month.