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https://scmp.com/business/markets/article/3013438/shanghai-posts-sixth-straight-day-losses-while-hong-kong-gains
Business/ Markets

Shanghai posts sixth straight day of losses while Hong Kong gains as fears of oil glut are added to jitters around ongoing trade war

  • June could end up worse than May in Hong Kong, says one analyst
  • Energy stocks lead declines as prices fall, US inventories jump
A man walks by an electronic board displaying stock prices at a brokerage house in Beijing on June 6, 2019. Photo: Associated Press

The Shanghai Composite Index posted its sixth straight trading day of losses, while Hong Kong bounced into slight gains near the close, as a global oil glut added to existing worries over the ongoing US-China trade war.

The Shanghai Composite began down Thursday and stayed down, ending with a loss of 1.17 per cent to 2,827.80, helping to pull the first week of June trading into a 2.45 per cent decline. That was its lowest level since February 22. It posted a weekly gain last week.

Meanwhile the CSI 300 of large caps in Shanghai and Shenzhen shed 0.9 per cent to 3,564.67 on Thursday, and a total 1.79 per cent through the week.

In Hong Kong, the Hang Seng closed up 0.26 per cent, ending at 26,965.28, in its second straight day of gains. This week, the bourse has risen by 0.24 per cent, in its first week of gains after four weeks of losses.

But still, investor sentiment overall remains negative.

Market sentiment for June does not look good, said Castor Pang Wai-sun, head of research for Core Pacific-Yamaichi.

“[Investors] are still worried about the trade war and, of course, there is another major concern about economic growth continuing to slow down. Maybe we will see a downturning in the global economy,” he said.

“The US stock market has had two days of rebounds over speculating on September interest rate cuts, but for Hong Kong, the overall stock performance is not very good.”

Turnover in Hong Kong and the mainland was below average on Thursday.

“There is a long holiday coming and no good news is in sight,” said Francis Lun, chief executive officer of Geo Securities, referring to the Dragon Boat Festival in Hong Kong and China on Friday. “ … June will almost certainly be worse than May, because more bad news may come and things could go even more downhill.”

Energy stocks were the big drag through the day in Hong Kong, with news overnight from the US spilling over into Hong Kong. The sector lost 0.72 per cent through the day.

According to Bloomberg, the price of US crude shed 5.4 per cent to be 22 per cent lower than its peak in April, while the price of Brent sank to its lowest level since January, below US$60. US government data also revealed total US petroleum stockpiles grew by about 22 million barrels last week, marking the largest jump in data that extends back to 1990. Meanwhile, US crude production set a record, while imports climbed at the same time, reported Bloomberg.

In Hong Kong, CNOOC led the pack as the biggest company drop of the day, falling 1.78 per cent. It was followed by China Petroleum & Chemical Corp, down 0.97 per cent, and Petrochina which lost 0.23 per cent.

In the mainland, PetroChina lost 0.99 per cent, while Sinopec was flat by the end of trading.

The big driver in Shanghai, where all sectors lost, was 5G stocks. Telecommunications led the slide, falling by nearly 4 per cent.

This came after Beijing issued 5G licenses to major telecom operators and embattled Huawei’s orders were reported to have fallen sharply. Traders were profit taking from 5G-related stocks, after the rose earlier in the week.

Nanjing Huamai Technology and ZhongTongGuoMai Communication, which provide telecommunications equipment, and Jiangsu Lettall Electronics, which manufacturers electrical components, all plunged by over 9 per cent.

This also extended to Hong Kong, where Sunny Optical dropped 1.31 per cent, and AAC Technologies lost 0.61 per cent.