Hong Kong stocks join global sell-off amid worries about Trump administration and terrorism

Hong Kong stocks finished the week just above the 27,000 mark after slipping 1 per cent on Friday, following a slump on Wall Street overnight as concerns mounted over US President Donald Trump’s ability to push through his economic agenda and after a terrorist attack in Barcelona.

The Hang Seng Index lost 1.08 per cent, or 296.65 points, to 27,047.57 while the H-shares index declined 1.00 per cent, or 107.77 points, to 10,693.65 points. Turnover stood at HK$84.48 billion.

Chinese online giant Tencent led the losses, declining 1.34 per cent to HK$325, following a sell off in tech shares in the US market.

“The tech sector has been driving the markets for a long time,” said Brad Sullivan, a broker at INTL FCStone Financial. “The real question is how long the rally can go on without major corrections.”

Separately, Hong Kong’s flagship carrier Cathay Pacific advanced 1.70 per cent to HK$12.00. Goldman Sachs upgraded the stock to a Buy and raised its target price to HK$14.6. The investment bank expected passenger demand to improve due to better economic conditions in mainland China and Hong Kong.

Credit Suisse upgraded the airline’s rating to neutral from underperform and increased the target price to HK$11.3.

However, most blue-chip stocks remained in negative territory on Friday, with banks and insurers suffering the biggest losses.

Shares of HSBC dropped 1.07 per cent to HK$73.80 while ICBC lost 2.14 per cent to HK$5.48. China Taiping fell 1.90 per cent to HK$23.30 and China Life was down 1.28 per cent to HK$23.15.

One of the two gainers in the insurance sector was Ping An Insurance, which rose 1.43 per cent to HK$60.20, after posting a 6.5 per cent increase in first-half profit.

Lenovo Group, China’s largest personal computer maker, lost 3.39 per cent to HK$4.56 after it posted a surprise first-quarter loss of US$72 million on Thursday night, citing higher costs and a sluggish PC market.

Power Assets, an electricity utility company owned by Hong Kong tycoon Li Ka-shing, fell 2.83 per cent to HK$68.00, as the stock began trading ex-dividend on Friday.

Mainland China stocks swung between gains and losses on Friday, with the Shanghai Composite adding 0.01 per cent or 0.29 points to 3,268.72 while the CSI 300 – which tracks the large caps listed in Shanghai and Shenzhen – increasing 0.09 per cent or 3.40 points to 3,724.68.

The Shenzhen Composite Index lost 0.37 per cent or 7.13 points to 1,902.25 while the tech-heavy ChiNext dropped 0.63 per cent or 11.60 points to 1,821.80.

Metal shares were weak, with Shenghe Resources Holding losing 8.11 per cent to 22.55 yuan, Yunnan Aluminium sinking 6.9 per cent to 11.12 yuan, and Tianqi Lithium Industries giving up 3.8 per cent to 62.23 yuan.

In Japan, Tokyo’s Nikkei 225 edged down 1.18 per cent as the yen rebounded and US dollar weakened. Japanese stocks had fallen to three month lows on Friday.

Other Asian markets joined the global sell-off on Friday. Australia’s S&P/ASX 200 dropped 0.56 per cent and South Korean Kospi lost 0.14 per cent.

Overnight on Wall Street, the S&P 500 tumbled 1.4 per cent to close at 2,433.04, the worst fall since May 17, as concerns mounted over President Trump’s ability to push through his economic agenda. The sell-off deepened after reports of a terrorist attack in Barcelona that killed at least 13 people.

“The Barcelona incident is unfortunate, but I don’t think it’s going to shake the markets that much,” said Sullivan. “The North Korea tensions and US administration are the major factors that affect the international markets.”

The Dow Jones Industrial Average ended down 1.3 per cent at 21,750.39, also the biggest percentage decline in three months.

The Nasdaq Composite settled lower by 1.9 per cent at 6,221.91.