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Hong Kong: Stocks tumble as US bill fuels economy fears
[HONG KONG] Hong Kong stocks plunged on Thursday after US lawmakers passed a bill supporting the city's rights, fuelling fears about ongoing China-US trade talks and raising concerns about its economic outlook.
Both houses of Congress overwhelmingly agreed to the bill on Wednesday and sent it to be signed off by Donald Trump.
The Hong Kong Human Rights and Democracy Act requires the president to annually review the city's favourable trade status and threatens to revoke it if its freedoms are quashed.
They also passed legislation banning sales of tear gas, rubber bullets and other equipment used by Hong Kong security forces in putting down the protests, which are now in their sixth month.
Beijing had already summoned a top US diplomat Wednesday over the Senate's passing of the bill and warned of "strong" countermeasures against the United States should it be signed into law.
The White House has not threatened to veto the measure and Mr Trump is expected to sign it, according to a source familiar with the matter.
The Hang Seng index dived 1.56 per cent, or 420.73 points, to 26,468.88.
The move comes just as US and Chinese negotiators try to put the finishing touches to a much-vaunted mini trade deal that is seen as the first part of a wider agreement. Markets had been rallying in recent weeks on optimism it will be signed off soon.
Now there is a growing fear about the future of Hong Kong's economy as removal of its US trading status would make it subject to the same tariffs as mainland China.
Its unique position has allowed the city to act as a conduit between China and the rest of the world, making it a major trading and financial hub.
"If the bill becomes law, investors will be hesitant to take on the risk," Hao Hong, head of research at Bocom International, told Bloomberg News. "There are too many moving parts, it's very tricky."
Stocks were down across the board in Hong Kong, with property firms again taking a hiding, having suffered hefty selling in recent weeks owing to the impact of months of violent protests.
Sino Land sank almost two per cent and Henderson Land Development dived 1.7 per cent, while Sun Hung Kai Properties shed 1.2 per cent.
Tech firms were weighed by worries about the trade talks, with Sunny Optical plunging more than three per cent and AAC technologies off two per cent.
Lenovo lost 2.2 per cent and insurance giant AIA was off 1.5 per cent while HSBC gave up one per cent.
Market heavyweight Tencent lost two per cent, while casino firms Sands China, Galaxy Entertainment and Wynn Macau were down between two and three per cent.