Hong Kong shares closed at a fresh eight-month low today, dragged lower by concerns about the Chinese economy, while Shanghai tumbled on fears the government is paring back equity buying.
Hong Kong’s benchmark Hang Seng Index lost 1.77 percent, or 410.38 points, to end the day at 22,757.47 on turnover of HKD105.07 billion (USD13.55 billion).
The index is at its lowest point since December and down some 20 percent from its April peak – approaching a bear market – hit by falls on the mainland and concerns a weaker yuan could hurt local companies.
Currency and economic worries also hurt Chinese shares, with the Shanghai Composite Index slumping 3.42 percent, or 129.82 points, to 3,664.29 on turnover of 501.2 billion yuan (USD78.4 billion).
“The concern over the weak economy is definitely there,” Phillip Securities analyst Chen Xingyu told AFP.
The Shenzhen Composite Index, which tracks stocks on China’s second exchange, dropped 3.00 percent, or 66.56 points, to 2,155.49 on turnover of 480.9 billion yuan.
China fuelled concerns about its economy, the world’s second-largest, when it devalued its currency last week in a shock move analysts said signalled growth may be weaker than thought.
Investors were also worried Beijing will reduce support for the share market, despite a pledge by the regulator that state-backed entities will continue to intervene for a number of years.
Beijing unleashed an unprecedented package of measures to shore up shares after they collapsed in mid-June in a rout that wiped some four trillion yuan off the market in around three weeks.
A key element was funding from the state-backed China Securities Finance Corp. (CSF) to buy stocks on behalf of the government, but dealers now fear that support could be scaled back.
“Investors are also scared that after many companies revealed the share stake holdings of the ‘national team’… there won’t be any more moves left, since the state has already bought so much stock,” Chen said.
Investors are now watching to see if Beijing will intervene to hold the Shanghai benchmark above 3,500 points.
“All eyes are focused on whether the government will shore up the 3,500 level,” Nelson Yan, chief investment officer at the Hong Kong unit of Changjiang Securities, told Bloomberg News.
“Any inaction could trigger a new round of selling.”
Energy firms were among the biggest losers in Shanghai after oil prices dropped to a six-and-a-half year low. PetroChina slid 4.36 percent to 10.32 yuan and Sinopec lost 3.28 percent to 5.60 yuan.
China Resources Gas finished down 9.81 percent in Hong Kong at HKD18.94 while CNOOC lost 3.19 percent to HKD9.11.
Property companies also fell. Shanghai-listed Greenland Holdings dropped by its 10 percent daily limit to 20.27 yuan while Shenzhen-listed China Vanke eased 1.52 percent to 14.28 yuan.
Shares in Cathay Pacific ended down 3.25 percent at HKD14.88 as investors feared the slowdown in China will hurt profits.
Words: AFP
Photo: Myriam Tsen/Coconuts Media
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