Hong Kong stocks in worst weekly decline since March as Trump adds to risk-off sentiment by axing Korea summit

PUBLISHED : Friday, 25 May, 2018, 6:25pm
UPDATED : Friday, 25 May, 2018, 10:24pm

Hong Kong stocks posted their worst weekly drop in two months on Friday, after US President Donald Trump called off a planned summit with North Korean leader Kim Jong-Un.

The Hang Seng Index fell by 0.56 per cent, or 172.37 points, to 30,588.04, taking its weekly losses to 1.48 per cent in its worst week since March 23. The Hang Seng China Enterprises Index lost 0.86 per cent, or 104.87 points, to 12,047.75.

Trump cancelled the June 12 meeting citing Pyongyang’s “open hostility”, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

“It’s becoming harder and harder to boost the market, as an overall risk-off market sentiment has been building up in the past few months,” said Linus Yip, chief strategist at First Shanghai Securities.

Chinese wind power and equipment stocks plunged after the National Development and Reform Commission, the country’s top planning regulator, published a circular on Thursday stipulating that from next year all wind farm development allocations will be subject to open competitive bidding. This means subsidies for the development of renewable energy will be gradually phased out.

Analysts expect the move will result in wind power prices that are lower than the current subsidised benchmark prices, moving closer towards those of coal-fuelled power, which is expected to be subjected to higher environmental protection costs.

It’s becoming harder and harder to boost the market, as an overall risk-off market sentiment has been building up in the past few months
Linus Yip, chief strategist, First Shanghai Securities

Xinjiang Goldwind Science and Technology, the country’s largest wind turbine producer, slid by 6.70 per cent to HK$12.54, China Suntien Green Energy Corporation lost 6.60 per cent to HK$2.69, China Longyuan Power Group, the country’s largest wind farm developer, slumped by 7.25 per cent to HK$6.65 while rival Huaneng Renewables tumbled by 8.61 per cent to HK$3.08. China Datang Corporation Renewable Power shed 4.79 per cent to HK$1.59.

Samsonite International plummeted by 12.38 per cent to HK$26.90 upon resumption in trading on Friday. The world’s largest branded luggage maker said a report by Texas short seller Blue Orca, which accused Samsonite International of “questionable accounting practises” and “poor corporate governance”, was misleading.

Wuzhou International Holdings dived by 84.89 per cent to HK$0.068 before suspending trade on Friday. The property developer said a report by International Finance News dated May 21 about the company facilitating illegal money collection was untrue.

Oil-related stocks retraced lower, in line with a decline in Brent crude futures. CNOOC dropped 3.53 per cent to HK$13.12 and PetroChina slipped by 3.04 per cent to HK$6.05. Sinopec was 1.07 per cent lower at HK$7.32, knocking 47 points off the benchmark index.

CSPC Pharmaceutical Group bucked the trend, surging by 6.81 per cent to HK$25.10, after Morgan Stanley said its share price was expected to rise in the next 60 days, noting that its first-quarter revenue and net profit rose by 55 per cent and 43 per cent, yearly, topping expectations.

Defensive stocks gained, with China Resources Power Holdings adding 0.05 per cent to HK$16.04, its highest level since June, and CLP Holdings rose by 0.54 per cent to HK$83.10.

On the mainland, stocks fell further, with the Shanghai Composite Index and the CSI 300 dropping to their lowest levels since May 8. The Shanghai Composite Index fell by 0.42 per cent, or 13.35 points, to a two-week low of 3,141.30 and the CSI 300, which tracks the large caps listed in Shanghai and Shenzhen, eased by 0.28 per cent, or 10.72 points, to 3,816.50.

The Shenzhen Composite Index fell by 0.93 per cent, or 17.02 points, to 1,810.03, and the Nasdaq style ChiNext fell by 1.84 per cent, or 33.85 points, to 1,804.55.

Technology and telecommunication stocks also ended lower. Insigma Technology slid by 5.37 per cent to 12.15 yuan, China National Software and Service dropped by 5.18 per cent to 21.96 yuan and INESA Intelligent Tech was 4.87 per cent lower at 21.96 yuan.