Hong Kong stocks slip to seven-week low as property worries spread to banks, swamping optimism about quarantine-free travel
- Property stocks sank over concern that rising refusals to pay mortgages will affect Chinese banks
- Stocks had risen earlier following health minister’s comments about possible quarantine-free travel by November
Hong Kong stocks slipped to their lowest level in almost seven weeks as property developers dragged down earlier gains bolstered by the possibility of conditional quarantine-free travel by November.
The Hang Seng Index fell 0.2 per cent to 20,797.95 at the close on Wednesday, marking the third consecutive day of losses and the lowest close since May 27. The Tech Index advanced 0.5 per cent, while the Shanghai Composite Index added 0.1 per cent.
Country Garden sank 8.5 per cent to HK$3.67, while Longfor Group lost 4.3 per cent to HK$31.35. China Merchants Bank tumbled 6.9 per cent to HK$43.75, while China Overseas Land and China Resources Land lost at least 2.1 per cent.
Property developers sank, as a selloff in Chinese property developers’ dollar bonds this week stemmed from rising coronavirus cases that infected their shares. More homebuyers are refusing to pay mortgages, and that could affect Chinese banks, said Jeffrey Zeng, analyst at CMB International, in a note published on Wednesday.
“The property crisis finally turned into an alarming event,” said Zeng. “If this goes further viral, we think it may again hurt the already-fragile primary sales market on the delivery risk,” he said.