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Pedestrians walk past a public screen displaying the Shenzhen Stock Exchange and the Hang Seng Index figures in Shanghai. Photo: Bloomberg

Hong Kong index slumps to three-week low as China data misses estimates, Macau casinos tumble

  • Macau casino stocks Sands China and Galaxy Entertainment lead Hang Seng Index lower as the gambling hub tightens scrutiny of the industry
  • China’s August data on industrial production, retail sales and investments all trail estimates
Hong Kong’s stocks dropped to the lowest level in three weeks, as China’s key economic data trailed projections and Macau casino operators tumbled after authorities in the former Portuguese colony proposed rules to tighten their grip on the industry.
The Hang Seng Index fell 1.8 per cent to 25,033.21 at the close on Wednesday, its lowest level since August 20. The Hang Seng Tech Index retreated 3.1 per cent. Sands China tumbled by a record 33 per cent, leading a sell-off that erased US$17 billion from Macau’s gaming stocks.

China’s Shanghai Composite Index slipped 0.2 per cent. Combined daily turnover on the Shanghai and Shenzhen exchanges surpassed 1 trillion yuan (US$155.3 billion) for 41 straight days, closing in on the 43-day record set in 2015.

China’s industrial production, retail sales and fixed-asset investment data for August all missed analysts’ estimates, underscoring the risk from the sporadic outbreaks of the Delta virus strain that forced parts of the country to reimpose lockdown measures last month. Retail sales grew 2.5 per cent last month, the weakest pace in a year, as restrictions on travel and big gatherings took their toll on domestic consumption.

“China’s data dump contained some unpleasant surprises as each release missed expectation,” said Jeffrey Halley, an analyst at Oanda. “With regards to the retail sales data though, one can’t divorce slump in consumer confidence from the ongoing multi-sector government crackdowns, where job losses are an inevitability. With the sectorial clampdowns and withering domestic consumer confidence, the downward repricing of China equities could be far from over.”

Sands China plunged by 33 per cent to HK$16.84, making it the worst performer on the Hang Seng Index. Its decline accounted for almost 10 per cent of the benchmark’s drop. Galaxy Entertainment slumped 20 per cent to HK$39.15 for its steepest drop in a decade. Wynn Macau tumbled 29 per cent to HK$6.40 and MGM China Holdings shed 27 per cent to HK$5.76.

The Macau government said late on Tuesday that it was seeking to revise the regulations that govern one of the pillar industries of China’s special administrative region. The overhaul includes introduction of government representatives to monitor day-to-day operations and increases in the minimum number of local directors in casino operators.

Macau will begin a 45-day consultation on the revision starting Wednesday and five public hearings will be held in the period, said Lei Wai Nong, the city’s secretary for economy and finance.

JPMorgan Chase cut its ratings on six casino operators to either neutral or sell, citing investors’ doubts about the outlook of the industry amid regulatory curbs in the mainland.

Most markets in Asia fell on Wednesday tracking overnight losses in US equities, where a weaker-than-expected inflation report stoked concerns about the impact of the Delta virus variant on the economy and fuelled a rally in Treasuries.