Hong Kong markets fall amid fears of stricter regulation on mainland
AIA was the worst performing blue chip, sliding 2.29pc to HK$66.25, its biggest drop since July 4
Hong Kong stocks pared loses on Tuesday, after being dragged down by insurers and banks as investors took profit amid increasing concern that China’s regulatory oversight will tighten liquidity.
The Hang Seng Index closed the day marginally down 0.02 per cent, or 5.34 points, to 29,680.85, while the Hang Seng China Enterprises index dropped 0.57 per cent, or 66.69 points, to 11,705.58.
In recent weeks, Beijing has stepped up efforts to manage excessive risk in the financial markets, triggering concerns that Chinese bond yields will continue their ascent, while stocks will underperform global peers on tighter liquidity conditions.
China’s securities regulator will suspend approval of new mutual funds meant for investing in the Hong Kong equity market, according to people familiar with the matter, putting a temporary cap on southbound capital that has boosted the city’s benchmark stock index to a decade high.
Earlier this month, draft guidelines were unveiled for the asset management industry that would ban financial institutions from guaranteeing investors against losses, while liquor giant Kweichow Moutai was officially singled out for its overly rapid share-price gain. The central bank had also ordered a crackdown on online lenders to curb runaway credit.
“There was improvement in the market sentiment as the mainland A-share market rebounded in the afternoon, so it repaired the loses of the Hong Kong stock market towards the closing,” said Louis Wong Wai-kit, director of Phillip Capital Management.
After falling by as much as 0.65 per cent to a three-month low of 3,300.781 on Tuesday morning, the Shanghai Composite Index was up 0.34 per cent, or 11.43 points, to 3,333.66 at the close. The CSI 300 Index – which tracks the large caps listed in Shanghai and Shenzhen – edged up 0.14 per cent, or 5.87 points, to 4,055.82.
The Shenzhen Composite Index also rose 1.35 per cent, or 25.50 points, to 1,918.319, erasing the day’s earlier losses of 0.14 per cent.
“There were reports of instructions from the regulators in China to fund management companies to not to make big disposals, so that helped stabilise market sentiment on the Asian markets,” Wong said.
Internet giant Tencent recovered from the daily low of HK$402.20 to close up by 1.9 per cent, or 7.8 point, to HK$419.20.
“Financial sector faced certain pressures this morning, which were a continuation of the selling yesterday. In the afternoon the market recovered and the share prices of the insurance companies also gained a footing,” Wong said. Ping An reversed the downward trend and closed at HK$81.55, up 0.06 per cent, or 0.05 points.
AIA was the worst performing blue chip, sliding 2.29 per cent to HK$66.25. Bank of China fell 0.78 per cent to HK$3.81, and China Construction Bank lost 0.72 per cent to HK$6.90.
In other Asian markets, Tokyo’s Nikkei 225 dropped 0.04 per cent to 22,486.24 and the Sydney All Ordinaries was down 0.06 per cent. The South Korea’s Kospi was up 0.25 per cent.