Hong Kong Market Closes At Three-Week Low

May 30, 2018

NewsStandOnline.Net (30-May-2018): Hong Kong shares slid to a fresh three-week low today as political uncertainty in Italy sparked a flight to safety across the globe. Local sentiment was also hurt by word that the U.S. will move ahead with some proposed tariffs on imports from China.

The Hang Seng Index dropped 1.4% to 30,056.79, with 47 of its 50 constituents ending lower. Internet services major Tencent Holdings retreated 1.7% and China Construction Bank (CCB) gave up 2%. The two were the biggest contributors to the index’s losses by points.

London-headquartered lender HSBC Holdings dropped 1.3% and CK Hutchison Holdings, which generates a large portion of its revenue from Europe, slid 1.1%.

Agricultural Bank of China (ABC) fell 1.7%. The lender said the China Securities Regulatory Commission had approved its application for a 100 billion yuan ($15.7 billion) private placement of its domestically listed shares.

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Political turmoil in Italy kept investors on edge after Carlo Cottarelli, nominated by the country’s president to serve as a caretaker prime minister, reportedly failed to secure support from major political parties. Demand on Tuesday for safe-haven assets fueled by worries about Italy’s future ties to the EU pushed the yield on U.S. Treasurys down to levels not seen since early April.

“The Italian political struggle does pressure the Hong Kong market,” said Andy Kwan, director of ACE Centre for Business and Economic Research in Hong Kong. “Soaring Italian bond yields also reflect investor worries over the market, but I think investors should not worry too much. We can see capital flowing into the U.S. bond market; this will flow out when market sentiment calms down.”

In Wednesday trading, Italy’s benchmark FTSE MIB index was up 0.5% while the yield on the nation’s two-year government bonds, which had nearly tripled to 2.43% on Tuesday, slid back under 2%. The Euro Stoxx 50 Index was 0.3% lower on Wednesday.

In Asia, the Nikkei Asia300 Index of regional stocks outside Japan slumped 1.6%. Mainland Chinese stocks suffered heavy losses, with the Shanghai Composite Index slumping 2.5% and the ChiNext index of small-capital shares in Shenzhen declining 2.7%.