Hong Kong’s inventory market is caught in an ideal storm.
Fears concerning the commerce conflict, rising markets, China’s slowing economic system, and particular person shares pushed the town’s benchmark Dangle Seng Index ( right into a bear market on Tuesday. )
The index ended the day zero.7% decrease, closing greater than 20% under its current peak in January.
The Hong Kong market, one of many world’s most closely traded, has been rocked this 12 months by the escalating commerce conflict between China and the USA. The waves of latest tariffs have harm Hong Kong as a result of most of the greatest corporations listed within the metropolis are based mostly in China.
Dickie Wong, analysis director at Hong Kong-based inventory dealer Kingston Securities, predicts the market may doubtlessly fall one other 5% within the quick time period. The gloom is more likely to final at the very least till the US midterm elections in November.
“Rising tensions between the USA and China aren’t going to finish earlier than then,” Wong stated.
Mainland Chinese language shares entered a bear market in late June, and have fallen an additional 6% since then.
The commerce conflict is already starting to take its toll on the Chinese language economic system, in keeping with current information. China’s foreign money, the yuan, has additionally fallen in current months.
That makes it dearer for Chinese language buyers to purchase Hong Kong shares as a result of they’re priced within the Hong Kong greenback, which is pegged to the US greenback.
One of the crucial notable casualties of current declines in Hong Kong has been Tencent (. The web large has misplaced about $200 billion in market worth since January, weighed down by issues concerning the Chinese language authorities’s strikes to tighten restrictions on on-line gaming. )
Tencent is likely one of the greatest elements of the Dangle Seng, so steep declines in its share worth can drag down the index as an entire, Wong famous. Traders are additionally pessimistic concerning the prospects of different heavyweight shares similar to HSBC (, he added. )
The Hong Kong market, which hit an all-time closing excessive in January, is dealing with different issues.
After crises in Turkey and Argentina, nervous buyers have yanked cash out of different rising markets. That has hit Chinese language shares listed in Hong Kong, since China is taken into account to be the world’s greatest rising market.
Hong Kong can also be feeling the warmth from the US Federal Reserve, which is elevating rates of interest. Hong Kong follows the Fed in the case of charge hikes, which make it dearer for buyers to borrow money and purchase shares.
CNNMoney (Hong Kong) First revealed September 11, 2018: 5:17 AM ET