Hong Kong stocks tumble amid protests
Gauge of property-related stocks slipped 1.7 per cent, while Cathay Pacific Airways fell as much as 5.4 per cent
Hong Kong’s stocks fell amid renewed pressure after protesters brought the city’s airport to a standstill, highlighting the economic fallout from weeks of anti-government demonstrations that show no sign of easing.
The The Hang Seng Index closed down 2.1 per cent in Hong Kong. The city’s international airport continued to suffer flight cancellations as it resumed operations after a mass sit-in by anti-government protesters.
The Hang Seng Properties Index fell 2.3 per cent and entered a technical bear market, having fallen more than 20 per cent from an April peak. Cathay Pacific Airways, which on Monday tumbled to its lowest levels in a decade, fell 2.6 per cent.
"The market is extending declines today and selling pressure is still very huge," said Linus Yip, First Shanghai Securities strategist. "Names that used to be defensive are falling, such as utilities, MTR Corp and Reits, which shows investors are very cautious. We haven’t seen the bottom yet." MTR Corp, regarded as one of Hong Kong’s safest stocks before the protests began, fell 3.9 per cent. Prada tumbled 7.1 per cent.
Hong Kong’s leader Carrie Lam warned that the Asian financial centre risked sliding into “an abyss”, in a news conference on Tuesday.
Black-clad protesters swarmed the airport Monday, causing the biggest disruption yet to the city since the unrest began in June. The Hang Seng China Enterprises Index of Chinese firms has lost more than 16 per cent since its April high, not far from entering a technical bear market. The MSCI Hong Kong Index has fallen more than 14 per cent since a recent peak on July 19.
The threat from the US-China trade war and weeks of local unrest is already showing in the property market, as well as on tourist numbers, hotel occupancy and retail sales. A weak yuan is another cause for concern, as it will damp spending from mainland visitors and pressure earnings for firms that rely on China. Profits for members of the Hang Seng Index are forecast to drop the most since the global financial crisis this year, data compiled by Bloomberg show.
“It looks like the situation will get worse,” said Airy Lau, investment director at Fair Capital Management. “Together with the higher global recession risk from US-China friction, the Hang Seng Index is likely to have 5 to 10 per cent more downside.”
Mainland investors have made the most of the slump in Hong Kong-listed equities, purchasing $4 billion (Dh14.69bn) of stocks through exchange links for 18 straight days. They bought a net $309m worth of the city’s shares on Tuesday.
Updated: August 13, 2019 12:51 PM