HONG KONG, Nov 12 (NNN-AGENCIES) – Hong Kong stocks went into a tailspin, with the local benchmark gauge seeing its steepest single-day fall since Aug, as investors ran for cover, amid escalating social unrest in the city, and lingering Sino-US trade tensions.
The Hang Seng Index dived 2.62 percent, or 724 points, to close at 26,926, after having shed more than 820 points in early trading. The Hang Seng China Enterprises lost 268.67 points, or 2.47 percent.
The intensified violence, unleashed by anti-government protesters, weighed on market sentiment, said Dickie Wong Tak-kei, executive director of research, at Kingston Securities.
He said, the outlook for the hard-hit retail, hotel, catering and tourism sectors will remain bleak.
Radical protesters went on another round of rampage across Hong Kong on Monday, resorting to arson and rampant vandalism of public and private facilities and businesses, as the “Extradition Bill Incident” entered its sixth consecutive month.
“We’re cautious about the situation in Hong Kong,” said Patrik Schowitz, global strategist at JP Morgan Asset Management. “It’s not an area where we, as global investors and allocators, would be looking to take a huge amount of risk,” he said.
Chris Leung Shiu-kay, executive director and chief China economist at DBS Bank Hong Kong, said, the prolonged unrest has damaged Hong Kong’s economy, and the retail and tourism sectors will continue to be weak, as it’s hard to predict when the chaos will end.
Singapore-based lender DBS, was the first to lower its forecast of the SAR’s GDP growth for this year to zero from 2.5 percent.
The Chinese mainland’s Consumer Price Index, a main gauge of inflation, surged at a fast pace of 3.8 percent last month, driven by rising pork prices, according to official statistics released on Saturday.
The slowdown has dragged down the city’s stock benchmark, as mainland stocks account for about 50 percent of those listed on the local bourse.
Wong said, it’s hard to have confidence in the market’s outlook with the uncertainties in the Sino-US trade talks and Hong Kong’s social issues.
He predicted that the Hang Seng Index, at best, would hit 28,300 by the end of the year.– NNN-AGENCIES
