Hong Kong stocks tumble with sell-off of year’s best performers

The Hang Seng Index posts its biggest daily decline in a year on Wednesday, while mainland stocks fall on heightened concern of regulatory crackdown

PUBLISHED : Wednesday, 06 December, 2017, 9:19am
UPDATED : Wednesday, 06 December, 2017, 10:36pm

Losses in Hong Kong stocks accelerated in Wednesday’s afternoon trading session with a sell-off in this year’s best-performers including Geely Automobile Holdings, Ping An Insurance and AAC Technologies, forcing the benchmark index to post its biggest daily decline in a year. Mainland China stocks dropped amid worries the regulators are escalating their crackdown on securities manipulation.

The Hang Seng Index tumbled 2.14 per cent, or 618 points, to 28,224.80, its worst daily drop since November 11, 2016, while the Hang Seng China Enterprises Index, or the H-share gauge, fell 2.8 per cent, its biggest fall in 13 months. The mainland’s key Shanghai Composite Index fell to its lowest level in over three months.

“Investors are turning on their risk-aversion mode as Hong Kong stocks are under the double pressure from the mainland and the US,” said Ken Chen, a strategist at KGI Securities in Shanghai.

A sell-off over recent weeks has sent the Hang Seng Index down 7 per cent from its peak on November 22 and its highest level in a decade. The gauge is still up 28 per cent so far this year and is Asia’s best-performing major stock market.

Sunny Optical Technology, China’s largest manufacturer of smartphone camera modules and lenses, tumbled 12.45 per cent to HK$109. AAC Technologies Holdings, a supplier of Apple, sank 7.28 per cent to HK$138.90. Tencent Holdings lost 2.66 per cent to HK$366.

Ping An dropped 4.2 per cent to HK$73, its biggest drop since July 2015. Geely Automobile slumped 8.39 per cent to HK$25.10.

Jiangxi Copper, the nation’s biggest producer of the reddish brown metal, lost 4.98 per cent to HK$11.44 and Aluminum Corp of China retreated 6.55 per cent to HK$4.85.

In the mainland, the Shanghai Composite Index lost 0.29 per cent, or 9.71 points, to 3,293.97, closing below the 3,300 level for the first time since August. Stocks of large companies fell across the board, with the CSI 300 Index losing 0.60 per cent, or 24.35 points, to 4,015.82.

In the latest sign of an intensified clampdown on excessive speculation, the China Securities Regulatory Commission fined local investor Wu Junle 1 million yuan (US$151,185) for trading stocks between accounts with the same ownership and spoofing, or quickly cancelling orders that are placed to create false buying or selling sentiment. That followed a bigger penalty of 54.3 million yuan in fine meted out last week to another trader for rigging share prices.

“There’s a lot of profit-taking pressure for these outperformers towards the year end,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Stricter regulatory surveillance has also caused some investors to flee the market.”

Stocks that have seen the biggest gains this year were among the major decliners on Wednesday. Baoshan Iron and Steel plunged 5.56 per cent to 8.50 yuan, trimming its annual advance to 33 per cent. Anhui Conch closed 3.24 per cent lower to 30.42 yuan.