Hong Kong stocks, currency slip on growing pessimism over economy
Hong Kong dollar eases to two-week low, while yuan hovers near 6.9000 level
Hong Kong stocks declined to a three-week low on Thursday after a surge in the US dollar overnight caused the city’s currency as well as offshore yuan to weaken, triggering pessimism over the economic outlook.
The US dollar and US Treasury yields surged after US Federal Reserve Chairman Jerome Powell said on Wednesday that rates need to continue to move towards an estimated neutral level and even a bit beyond.
He emphasised that the outlook for the US economy is “remarkably positive” and that the expansion now under way can continue “effectively indefinitely”.
The Hong Kong’s dollar has weakened by 0.3 per cent against the US dollar since September 21, while the offshore yuan traded in Hong Kong fell past the key 6.9000 level before rebounding slightly thereafter.
“It’s not looking good when the US dollar is strengthening and causing Asian currencies and their stocks to fall,” said Linus Yip Sheung-chi, a strategist at First Shanghai Securities. “Hong Kong’s stock market downtrend has further room to run.”
It seems China’s government policy stimulus so far is not really showing up or having an effect on the economy
The Hang Seng Index fell 1.7 per cent or 467.39 points to 26,623.87, the lowest since September 12.