Hong Kong stocks suffer worst day in three weeks amid uncertainties over Italy vote, ‘connect’ launch

Shanghai and Shenzhen stocks end the week lower as brokerage firms pull back before the launch of Shenzhen-Hong Kong Stock Connect

PUBLISHED : Friday, 02 December, 2016, 10:27am
UPDATED : Friday, 02 December, 2016, 10:43pm

Hong Kong stocks posted their worst daily drop in nearly three weeks on Friday as investors sold off risky assets amid uncertainty about the outcome of Italy’s referendum on Sunday, which could elevate political risks in Europe, and worries over potential profit-taking pressure after the launch of the Shenzhen-Hong Kong Stock Connect on Monday.

Macau gaming stocks were under heavy selling pressure after the Macau government proposed new measures to curb money laundering.

The Hang Seng Index dropped 1.4 per cent or 313.41 points to close at 22,564.82, its biggest daily percentage decline since November 14. It also marked the lowest close in more than a week.

For the week, the index lost 0.7 per cent.

The Hang Seng China Enterprises Index, or the H-shares index, fell 1.1 per cent or 111.08 points to 9,781.23.

Turnover for Hong Kong increased to HK$81 billion from HK$75 billion the previous day.

On the mainland, the benchmark Shanghai Composite Index shed 0.9 per cent or 29.47 points to close at 3,243.84, ending the week with a 0.6 per cent loss. The large-cap CSI300 Index lost 1 per cent or 36.09 points to 3,528.95 on Friday.

“Uncertainties loom large in the coming days,” said Guo Jianan, an analyst for Lianxun Securities.

“Investors should be aware of a potential spillover effect from the outcome of Italy’s referendum on Sunday. A ‘No’ vote might threaten Italy’s political stability and deal a blow to the country’s already struggling banks, sparking chaos in the euro zone,” he said.

Investors should be aware of a potential spillover effect from the outcome of Italy’s referendum on Sunday
Guo Jianan, Lianxun Securities

“Markets may also experience short-term fluctuations due to profit-taking activity after the Shenzhen-Hong Kong Stock Connect debuts on Monday,” he added.

Also weighing on the stock market was the uncertainty ahead of the US jobs report due out later on Friday, said Ric Spooner, chief market analyst at CMC Markets.

Among other major stock indices on the mainland, the Shenzhen Component Index declined 1.6 per cent or 175.53 points to 10,912.63 and the Shenzhen Composite Index slid 1.7 per cent or 35.2 points to 2,084.49. The startup board index ChiNext settled lower by 1.8 per cent or 38.48 points at 2,143.45.

Combined turnover for Shanghai and Shenzhen markets reached 597 billion yuan, slightly up from Thursday’s 560 billion yuan.

In Hong Kong, Macau casino operators struggled with heavy losses after the Macau government proposed that all travellers to the city must declare if they are carrying more than 120,000 Macau patacas in cash, a move aimed at intensifying efforts to fight money laundering.

Galaxy Entertainment skidded 4.7 per cent to HK$35.75, Wynn Macau sank 4.5 per cent to HK$13.16, Sands China dropped 4 per cent to HK$36.5, SJM Holdings lost 3.8 per cent to HK$6.1 and MGM China was 3.2 per cent lower at HK$16.38.

Blue-chip shares posted broad losses. Chinese online major Tencent Holdings declined 1.8 per cent to HK$191 and telecoms giant China Mobile lost 1.9 per cent to HK$84.3. Smaller rivals China Unicom and China Telecom fell 3.4 per cent and 1.1 per cent respectively, closing at HK$9.5 and HK$3.72.

On the mainland, brokerage firms pulled back after recent gains as traders booked profits before the launch of the stock connect on Monday.

In Shanghai, Citic Securities fell 2.7 per cent to 17.35 yuan and China Merchants Securities gave up 2.3 per cent to 18.77 yuan. In Shenzhen, GF Securities traded 2.2 per cent lower to 19.32 yuan.