Hong Kong stocks slide as yuan outlook stokes fund outflows while Evergrande, Country Graden slump on more bad news

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Hong Kong stocks declined as foreign investors continued to shun local markets amid concerns the yuan will weaken on widening interest-rate differentials. China Evergrande plunged after Chinese authorities detained some executives from its wealth management unit.

The Hang Seng Index fell 1.1 per cent to 17,987.71 at 10am local time, the most since September 7. The Tech Index declined 1.2 per cent while the Shanghai Composite Index dropped 0.2 per cent.

Alibaba Group tumbled 1 per cent to HK$85.35 and e-commerce rival dropped 1.2 per cent to HK$123.10, while food delivery platform operator Meituan slipped 1.4 per cent to HK$122.60. Macau casino operator Sands China weakened 0.6 per cent to HK$25.50 while travel operator lost 0.7 per cent to HK$282.40.

The yuan recently fetched 7.2880 per US dollar in offshore trading, versus 7.2807 on Friday, while its value held near a 16-year low in the onshore market. Wall Street investment banks including Goldman Sachs and Bank of America expect China to further cut rates to revive its economy, while the Federal Reserve is seen pausing or hiking in the near term.

The Hang Seng Index has retreated 1.1 per cent so far this month as Beijing’s piecemeal stimulus measures disappointed investors. Foreign funds sold US$2.1 billion of Chinese stocks last week, according to Stock Connect data, taking the cumulative six-week outflows to a record US$15 billion. Foreign-exchange outflows amounted to US$42 billion in August versus US$26 billion in July, Goldman said, the highest since 2016.

China’s desperate stock investors await a stimulus ‘bazooka’

China’s property market crisis continued to hurt sentiment. Debt-laden Evergrande crashed as much as 25 per cent to HK$0.465, after police detained some staff at its wealth management unit after it failed to pay on some investment products. Its shares recently traded at HK$0.59.


Elsewhere, Country Garden Holdings slipped 5.7 per cent to HK$1 before recovering to HK$1.03. The developer, once China’s largest home builder, is seeking to delay local bond maturities, while more offshore debt payments approach in the coming weeks. State-linked peer Sino-Ocean last week froze all offshore debt payments to reorganise its finances.

Shenzhen Fuheng New Material jumped 19 per cent to 6.77 yuan on its first day of trading in Beijing, the only market debutant on Friday.

Other major Asian markets weakened. South Korea’s Kospi lost 0.6 per cent and Australia’s S&P/ASX 200 dropped 0.7 per cent. Japanese markets are closed for a holiday.


The news is published by EMEA Tribune & SCMP210520-twitter-verified-cs-70cdee.jpg (1500×750)

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