Hong Kong stocks sink by most in 4 months as Chinese banks slide, yuan weakens while Fed minutes reaffirm rate-hike bias
- The yuan’s weakness could keep foreign investors at bay as China’s slowdown deepens, having dumped US$360 million of local stocks last quarter
- Minutes from the Fed’s June meeting indicate policymakers were generally in favour of more rate hikes later this year
The Hang Seng Index dropped 3 per cent to 18,533.05 at the close of Thursday trading, the worst sell-off since a 3 per cent loss on March 10, after sliding as much as 3.3 per cent earlier. The Tech index lost 1.7 per cent, while the Shanghai Composite Index declined 0.5 per cent.
Tencent weakened 2.6 per cent to HK$326.80, JD.com plunged 2.3 per cent to HK$135.50 and Alibaba Group slipped 1.4 per cent to HK$81.50. Macau casino operator Sands China tumbled 5.3 per cent to HK$26.70, and peer Galaxy Entertainment declined 1.8 per cent to HK$49.95. Developer Longfor tumbled 2.7 per cent to HK$18.28.
Investors had “low expectations for policy easing and structural reforms this year,” Goldman Sachs said in a survey of its local clients. “Local clients viewed these additional easing measures as ‘policy put’ to reduce growth headwinds, rather than to generate strong growth.”
The yuan weakened by the most in a week to a seven-month low of 7.2518 per dollar before recovering to 7.2463 in recent trading, according to Bloomberg data. A report this week showed China’s services sector grew at the slowest pace in five months in June. The currency has lost more than 5 per cent over the past three months, falling to a level not seen since October.
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Most investors doubted China would contribute significantly to an acceleration in global economic activity over a 12-month horizon, BCA Research said in a survey of clients. Foreign investors dumped US$360 million of yuan-denominated shares last quarter, according to Stock Connect data.