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Hong Kong: Stocks drop at open after protesters shut airport
[HONG KONG] Hong Kong's financial markets are under renewed pressure after protesters brought the city's airport to a standstill on Monday, highlighting the economic fallout from increasingly violent protests. The airport reopened on Tuesday morning, with more than 200 flights cancelled.
Hong Kong shares sank more than one per cent at the open on Tuesday following heavy losses on Wall Street.
The Hang Seng Index fell 1.12 per cent, or 288.10 points, to 25,536.62 at the open.
The benchmark Shanghai Composite Index slipped 0.60 per cent, or 16.94 points, to 2,798.05, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, eased 0.74 per cent, or 11.16 points, to 1,497.83.
The Hang Seng China Enterprises Index of Chinese firms has lost 16 per cent since its April high, not far from entering a technical bear market.
The threat from the trade war and weeks of local unrest is already showing in the property market, as well as 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 5-10 per cent more downside."
Shares of Cathay Pacific Airways, Hong Kong's main airline, tumbled to a 10-year low Monday as China barred its employees who supported the protests from flying to the mainland. Swire Properties - which operates malls and hotels in the city - fell 5.4 per cent, taking its losses since June 10 to 24 per cent.
Mainland investors have made the most of the slump in Hong Kong-listed equities, purchasing stocks through exchange links every day this month. They bought a net US$289 million worth of the city's shares on Monday, even as onshore markets rallied. The Hong Kong dollar weakened as much as 0.02 per cent on Tuesday.
Within the region, Asian shares also slipped on Tuesday amid fears about a drawn out US-China trade war, protests in Hong Kong and a crash in Argentina's peso currency. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.26 per cent while Japan's Nikkei tumbled 1.28 per cent.
The Singapore market opened weaker on Tuesday after a long weekend, with the Straits Times Index tumbling 1.07 per cent to 3,135.10 points as at 9.11am.
AFP, BLOOMBERG, REUTERS