Credit - Bloomberg
Hong Kong shares plunged on the first trading day of the year, extending 2018’s decline as Chinese factory data pointed to a worsening economic slowdown.
Wednesday 02, January 2019
(Bloomberg)--The Hang Seng Index fell three per cent as of 3:19 p.m. local time, on track for its biggest drop since 23 October. Cnooc Ltd., Country Garden Holdings Co. and CSPC Pharmaceutical Group Ltd. all slid more than six per cent, leading declines. The Hang Seng China Enterprises Index fell 3.1 per cent, sinking below the 10,000 level. The Shanghai Composite Index lost 1.2 per cent.
It was one of the worst openings to a year in the past two decades, off the back of a 14 per cent loss for the Hang Seng Index in 2018, with stocks hostage to everything from the US-China trade dispute to a global tech sell-off and rising interest rates. Further evidence of slowing Chinese growth weighed on investors Wednesday as a closely-watched manufacturing gauge had its lowest reading since May 2017.
“There are a lot of uncertainties lying ahead,” said Banny Lam, head of research at CEB International Investment Corp. “The markets will likely be stuck in a downtrend over the next few weeks.”
Property stocks were among the biggest decliners in Hong Kong. “Some funds are readjusting their positions for the new year and may be dumping stocks in sectors with an uncertain outlook like property and health care,” said Linus Yip, a Hong Kong-based strategist with First Shanghai Securities Ltd. “That’s why we’re seeing a sell-off.”
Money market rates fell in China and Hong Kong. The Hong Kong dollar’s one-month interbank borrowing costs, known as Hibor, tumbled the most in more than a decade as cash supply loosened after a seasonal liquidity squeeze. The currency weakened as much as 0.07 per cent to 7.8369 to the greenback, its lowest intraday level since November.
China’s 10-year government bond futures rallied for a fifth day, set for the longest run of gains since October. The contracts advanced 0.27 per cent to 97.98.