Led by declines in heavyweights such as Tencent Holdings, Chinese financials and property developers, amid concerns about a weak local dollar and the US-China trade war, the Hong Kong stock market extended its losses by the close of midday trading on Monday.
The Hang Seng Index dropped 1.47 per cent, or 452.45 points, to 30,355.93, and the Hang Seng China Enterprises index slid by 1.87 per cent, or 229.50 points, to 12,031.73.
Chinese internet giant Tencent eased 1.52 per cent to HK$401.80, knocking 43 points off the benchmark index.
Ping An Insurance (Group) slid by 1.91 per cent to HK$82.35. Its subsidiary, Ping An Good Doctor, is reported to have passed a listings hearing in Hong Kong, with road shows scheduled from April 23 to April 26, with a flotation expected on May 4.
China Construction Bank lost 2.08 per cent to HK$8 and the Industrial and Commercial Bank of China tumbled by 2.20 per cent to HK$6.67. Hong Kong Exchanges and Clearing, the city’s bourse operator, was 2.04 per cent lower at HK$258.80.
Property developers fared poorly too. Country Garden slumped by 4.11 per cent to HK$15.86, China Evergrande Group slid by 4.02 per cent to HK$26.25, and Sun Hung Kai Properties lost 2.17 per cent to HK$126.40.
“Market sentiment is being hit by the HKMA’s need to intervene in the market, and by the unstable geopolitical and trade environment,” said Stanley Chan, director of research at Hong Kong-based research and investment information company Emperor Securities.
The Hong Kong Monetary Authority stepped into the foreign exchange market for a second day on Friday to prop up the Hong Kong dollar, in line with the city’s currency board system, to peg the local dollar to the US dollar. It bought HK$6.4 billion on Friday and HK$3.26 billion on Thursday. Despite the purchases, the Hong Kong dollar continued to breach the 7.8500 level early on Monday, where it is expected to hover in the coming month or two.
Intervention by the city’s de facto central bank has sparked worries about the prospects of tighter liquidity in the banking system and a path to higher interest rates for the city, which could eventually prick its massive property bubble.
Meanwhile, media reports suggest the United States is expected to publish a detailed list this week of the US$100 billion worth of tariffs it plans to imposed on China. The White House is being viewed as increasing pressure on Beijing by preventing it from investing in science and technology in the US, to force it to make trade concessions.
On the mainland, the Shanghai Composite Index fell by 1.50 per cent, or 47.40 points, to 3,111.65. The CSI 300, which tracks large caps listed in Shanghai and Shenzhen, dropped 1.63 per cent, or 62.98 points, to 3,808.16, and the Shenzhen Composite Index eased by 0.67 per cent, or 12.30 points, to 1,822.08. The Nasdaq style ChiNext edged up 0.27 per cent, or 4.89 points, to 1,829.48.
Chinese technology-related stocks were also hit. Zhenhai Petrochemical Engineering dived by 5.40 per cent to 23.81 yuan, Zhongyuan Union Cell and Gene Engineering Corp slumped by 4.10 per cent to 22.95 yuan, and Guizhou Transportation Planning Survey and Design Academy lost 3.07 per cent to 66.34 yuan.