Hong Kong stocks slide in short session due to Typhoon Higos, with Trump’s latest salvo weighing on sentiment
- Trading in Hong Kong was suspended in morning over typhoon
- Trump calls China’s handling of virus ‘unthinkable’; US universities urged to cut Chinese stocks
Hong Kong stocks slid, snapping a two-day winning streak as investors dealt with a typhoon at home that shortened the trading session and another metaphorical one sent by US President Donald Trump that depressed sentiment.
The Hang Seng Index slipped 0.7 per cent to close at 25,178.91 on Wednesday, with sentiment weakened by worsening US-China relations. Overnight, President Donald Trump attacked China’s “unthinkable” handling of the coronavirus. Meanwhile, US universities were urged to dump Chinese stocks.
“The constant drumbeats around US-China frictions continue to temper the mood,” said Stephen Innes, chief global market strategist at AxiCorp. “The US dollar remains under pressure,” he added.
The Hong Kong dollar touched HK$7.75, the upper end of the trading band of its peg against a weakening US dollar.
Hengan International, which makes sanitary napkins and diapers in China, dropped 5.4 per cent after reporting first-half earnings rose 20 per cent year on year to 2.26 billion yuan. International brands including those from the US are threatening Hengan’s market share, especially for diapers, in the mainland.
Chinese software company Kingsoft rose 6.7 per cent after reporting net profits of 9.15 billion yuan for the second quarter, reversing from a loss of 1.42 billion yuan year on year.
And mobile maker Xiaomi shot up 3.4 per cent. Morgan Stanley analysts said the smartphone maker’s market share would rise as a result of US restrictions on Huawei. “Huawei’s increasing use of third party chips will reduce its competitive advantage in phones,” Morgan Stanley analysts wrote in a note on Tuesday.
The three firms will replace snack maker Want Want China, developer Sino Land, and China Shenhua Energy on the gauge, indicating a shift from traditional industries to new economy and biotech firms.
Want Want China slipped 0.3 per cent, Sino Land rose 0.6 per cent while China Shenhua Energy was little changed.
"Sunny Optical came down ... because if you can’t sell things to Huawei because of the executive order that broke the supply chain, the market worries. Indirect suppliers are also worrying, because it affects the whole chain," said Louis Tse Ming-kwong, managing director of VC Asset Management.
The Shanghai Composite fell 1.2 per cent to 3,408.13, pulled down by information technology, consumer discretionary and health care stocks. The declines snapped a four-session winning streak.
Kweichow Moutai, the liquor giant that is one of the most heavily traded mainland stocks on the Stock Connect, slipped 1.1 per cent to 1,687 yuan.
Two companies debuted in the mainland. Welding material manufacturer Hangzhou Huaguang Advanced Welding Materials rocketed 199 per cent on the Star Market, where there are essentially no limits on price movements during the first week.
Hangzhou Greenda Electronic Materials, which produces electronic chemicals, soared by the daily upside limit on most boards of 44 per cent.
Traders assessed the latest arrows shot overnight by the US at China.
The US State Department has also asked colleges and universities to divest from Chinese holdings in their endowments, warning schools in a letter to get ahead of potentially more onerous measures on holding the shares, Bloomberg reported.
The morning session was cancelled due to the issuance of Typhoon Signal No. 9. The Observatory lowered the signal to a no. 3 strong wind warning as Typhoon Higos moved away from the city, and trading resumed at 1.30pm.
Additional reporting by Deb Price and Ji Siqi