HK and China stocks fall after Federal Reserve warns on stimulus to support recovery, pandemic resurgence

25-Sep-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong and China stocks fell, taking cues from a sell-off in US equities, amid fears that policymakers are not doing enough to support further economic recovery and a resurgence of the coronavirus pandemic will derail growth.

The Hang Seng Index dropped 0.8 per cent, or 195.25 points, to 23,547.26 at the open on Thursday. The mainland’s Shanghai Composite Index declined 0.7 per cent to 3,257.01.

Other major markets in Asia all headed south, with South Korea’s Kospi index falling 1.1 per cent, making it the region’s worst performer. The S&P 500 slumped to an eight-week low in overnight trading, extending its loss to 10 per cent from a recent high. Other asset classes from crude oil to gold all slipped, while investors snapped up the US dollar as a haven, setting a gauge tracking the American currency on course for its biggest monthly gain since April.

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While Federal Reserve chair Jerome Powell said earlier that the world’s largest economy has a long way before fully recovering and requires more support, the chance of a new fiscal stimulus seems to be fading before a contentious presidential election. Meanwhile, a recent increase in rising cases of Covid-19 in the US and other nations added to the weak sentiment, with some European countries imposing more social distancing measures.

“Fading prospects for US fiscal stimulus and the stepping up of mobility restrictions on concerns about the second wave of Covid-19 are smacking global stock markets again,” said Stephen Innes, a strategist at AxiCorp. “Risk market losses, especially US equity losses, signal that all the possible juice that can be extracted from declining real rates has already been squeezed.”

Smartphone maker Xiaomi and oil major CNOOC were the biggest decliners on the Hang Seng Index, falling at least 2 per cent.

All the four IPO debutants Beijing TopNew Info&Tech, Pinlive Foods, Zhejiang Songyang Automotive and Friend Co. surged on the mainland’s exchanges. Beijing TopNew, an operator of internal data centres, was the best performer, jumping 462 per cent from its offer price to 71.14 yuan in Shenzhen.


Category: Hong Kong

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