Hong Kong: Stocks dive 3.1% at end of volatile week

[HONG KONG] Hong Kong stocks plunged more than three per cent Friday in a second hammering this week, as global markets are swept up in a wave of selling while investors fret about the impact of US interest rates tightening.

The Hang Seng Index sank 3.10 per cent, or 943.85 points, to close at 29,507.42 - tumbling more than nine per cent since last Friday.

The benchmark Shanghai Composite Index fell 4.05 per cent, or 132.20 points, to 3,129.85 on turnover of 272.1 billion yuan (S$57.23 billion). It lost 9.60 per cent over the week.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 3.19 per cent, or 55.31 points, to 1,679.26 on turnover of 222.1 billion yuan. It lost 7.81 per cent this week.

The HSI has now lost all the gains it enjoyed over a stellar January, as the sell-off that has haunted markets across the globe returned. Hong Kong plunged more than five per cent on Tuesday before two relatively benign days of trade.

Trading floors have been awash with red in February on fears that the booming global economy and rising inflation will lead to higher interest rates.

Friday's drop followed another Wall Street retreat with the Dow suffering its second-heaviest daily points fall on record - the worst coming on Monday - after key US Treasury bond yields spiked fuelling the likelihood of higher borrowing costs.

The week had started badly after last Friday's strong US jobs report that also showed rising US wage growth, increasing speculation the Federal Reserve will lift rates more than the three times already expected this year.

Among the biggest losers Friday were energy firms, which have been shredded by a drop in oil prices - both main contracts are around 10 per cent off their recent highs seen in January.

PetroChina led the selling, diving 3.41 per cent to HK$5.38 while CNOOC plunged 2.96 per cent to HK$11.16 and Sinopec lost 2.72 per cent to HK$6.08.

Volatile casino operators tumbled with Galaxy Entertainment down 6.05 per cent at HK$62.90 and Wynn Macau - which surged eight per cent Thursday - down 4.44 per cent at HK$25.80.

Market heavyweight Tencent slumped 3.05 per cent to HK$407.40 and HSBC slipped 0.87 per cent to HK$79.80 while insurance giant AIA fell 4.28 per cent to HK$59.30.

The plunge in Shanghai has left the the market at its lowest point since last June.

"Chinese markets showed signs of a rebound from the previous day with better performance in technology and small stocks but the spillover effect from US stocks was too strong." said Zhang Yanbing, an analyst with Zheshang Securities.

"When Wall Street sneezes, global markets catch a cold." China's government, still smarting from a dizzying 2015 stock rise and crash, has taken increasing steps to steady the nation's often volatile share markets.

China's central bank said Friday it had freed up liquidity worth about 2 trillion yuan to meet demand before the Chinese new year next week, an apparent attempt to ease fears about the recent falls.

"We are still in the depth of market volatility as sentiment was hurt by the double whammy of US market turmoil and deleveraging efforts at home," Wu Kan, a Shanghai-based fund manager at Shanshan Finance, told Bloomberg News.

"Risk appetite has dropped sharply and I don't think the situation will get any better before the Chinese New Year holiday." Ping An Insurance dropped 6.61 per cent to 64.43 yuan and New China Life Insurance plunged 9.05 per cent to 51.63 yuan.

Banking giant ICBC dropped 2.05 per cent to 6.68 yuan and China Citic Bank plunged 4.83 per cent to 6.90 yuan.

AFP