HK stocks fall to three-month low as traders keep a close watch on simmering US-China tension

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

Hong Kong stocks dropped to a three-month low, as traders remained wary of simmering tensions between Beijing and Washington, while HSBC Holdings slumped to the lowest level in more than a decade.

The Hang Seng Index dropped 1 per cent, or 232.32 points, to 24,223.09 at the break on Monday, heading for the lowest close since June. HSBC proved to be the biggest drag on the city’s benchmark, after Global Times newspaper reported that the British bank could be included in China’s list of “unreliable entities” for endangering national security. HSBC was also named in a report by the International Consortium of Investigative Journalists on banks that “kept profiting from powerful and dangerous players” in the past two decades even after the US imposed penalties on the institutions.

The mainland’s Shanghai Composite Index slipped 0.4 per cent to 3,324.41.

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Over the weekend, US President Donald Trump said he had approved the bid by Oracle for the American business of TikTok, which owns the Chinese video-sharing app and is seen by the White House as a threat to national security. Meanwhile, traders were also keeping a close watch on the developments in US fiscal stimulus talks and China’s loan prime rate, one of its benchmarks on lending rates, which was left unchanged this month.

“Risk is trading uncomfortably [and with] uncertainty,” said Stephen Innes, a strategist at AxiCorp. “It is questionable just how high sentiment can fly this week as the drip-feed of negatives continues to weigh on risk sentiment.”

HSBC tumbled 2.9 per cent to HK$30.05, heading for the lowest close since April 2009 and extending its decline to 51 per cent this year. The stock accounted for a fifth of the decline on the Hang Seng Index on Monday. Possible penalties by China include restrictions on trade, investments and visa issuances.

Other big decliners included Xiaomi and Sands China, which fell at least 3 per cent.

On the plus side, Guolian Securities surged 48 per cent to HK$5.28 after saying that it plans to acquire Sinolink Securities, its bigger rival on the mainland, through a stock swap. Guolian will also buy a 7.8 per cent in Sinolink from its biggest shareholder Yongjin Group, according to an exchange statement. The mainland-traded shares of Guolian and Sinolink were both suspended on Monday.

All five initial public offerings on the mainland’s exchanges surged on the first day of trading. Zhejiang Lante Optics, a maker of optical products, was the best performer, surging 102 per cent to 31.20 yuan on the Star Market in Shanghai. 3Peak Incorporated, another Star board debutant that makes electronics components, jumped 88 per cent to 217.61 yuan.

The three other IPOs, including Guangdong Tengen Industrial Group and Chongqing Baiya Sanitory Products, all rose by 44 per cent, the maximum allowed for new shares trading on the main boards.


Category: Hong Kong

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