HK stocks slide as CNOOC crashes 10 per cent on US sanctions amid worrying jump in Covid-19 infections

01-Dec-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong stocks fell by the most in six weeks to end the month on a sour note after a report of potential new sanctions on Chinese companies by the outgoing Trump administration and a worrying jump in local Covid-19 infections.

The Hang Seng Index tumbled 2.1 per cent to 26,341.49 amid the twin concerns, ending six days of advance. The Shanghai Composite retreated 0.5 per cent, for a monthly gain of 5.2 per cent.

CNOOC crashed 14 per cent and led declines in Hong Kong as the stock marked its biggest loss since a 17 per cent slump on March 9. PetroChina dropped 6.1 per cent, while Sinopec plunged 6.9 per cent. Both stocks declined by the most since May 4.

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Reuters reported on Monday that the US was poised to target CNOOC parent, China National Offshore Oil Corp, to a blacklist of companies with alleged ties to the Chinese military. In August, the US acted against 11 Chinese firms and a designation of 20 top Chinese firms it deemed to be owned or controlled by the Chinese military.

The potential move by the Trump administration “came as a bit of a shock to the markets”, said Stanley Chan, director of research at Emperor Securities.

In a filing to the Hong Kong stock exchange Monday afternoon, CNOOC said that its parent company has not yet received any official notice or decision from relevant US government agency, Chip maker SMIC, one of the sanction targets, fell 2.7 per cent.

Potential new sanctions by the US was a key driver dragging the Hang Seng Index down, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. The index was also coming up against the 27,000 resistance, “so some investors have chosen to lock in part of their profits,” he said.

Investors were also getting a bit concerned about a fourth wave of Covid-19 infections in the city, Chan added. Chief executive Carrie Lam Cheng Yuet-ngor announced tightened restrictions and sent government servants back to working from home. The city recorded 76 new cases Covid-19 cases on Monday.

“Property and retail sector-related stocks were particularly impacted by the recent surge in coronavirus infections,” said Chan. “Domestic stocks have seen a bit of a rebound and risen quite a bit in November. This is the last trading day of November, so many investors decided to sell and take profits.”

Property stocks fell. Wharf REIC dropped 4.3 per cent, while Hang Lung Properties declined 4.2 per cent.

The Hang Seng Index rose by 9.3 per cent in November, its biggest monthly increase since January 2018 when it gained 9.9 per cent. The index had risen 11 per cent this month before today, the most since April 2015, on the back of positive news about experimental coronavirus vaccines.

Chinese equities slipped, reversing from a more than 1 per cent gain in early trading from a government report showing sustained confidence in Chinese manufacturing and services industries.

The official manufacturing purchasing managers’ index (PMI) a survey of sentiment among factory owners rose to 52.1 last month from 51.4 in October, according to the National Bureau of Statistics. This was higher than the median prediction of a poll of analysts conducted by Bloomberg, which expected a small rise to 51.5.

Non-manufacturing PMI a gauge of sentiment in the services and construction sectors rose to 56.4 from 56.2, beating consensus forecast of 56.0, today’s report showed.

Markets in the Asia Pacific also declined. Japan’s Nikkei 225 slipped 0.8 per cent, while South Korea’s Kospi dropped 1.6 per cent. Australia’s S&P/ASX200 declined 1.3 per cent.


Category: Hong Kong

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