Hong Kong Stocks Reopen With Worst Start to Month Since 2011
The Hang Seng Index dropped as much as 3.5% in early trading Monday, while a gauge of Chinese companies fell 3.8%.
(Bloomberg) -- Hong Kong stocks slumped amid signs the bullish sentiment that had added $14 trillion to global equity values is now faltering.
The Hang Seng Index closed down 4.2% Monday, the biggest decline for a month’s first day of trading since 2011, while a gauge of Chinese companies fell 4.4%. The city’s stocks had last traded on Wednesday, before a global market recovery lost momentum and tensions between the U.S. and China flared up over the origin of the coronavirus. Futures on the S&P 500 were recently down 0.7%, signaling further losses after the underlying index dropped 2.8% to end last week.
Hong Kong authorities are this week preparing to ease some lockdown measures amid signs the coronavirus outbreak has been contained. Still, concern remains over a collapse in corporate earnings in what could be the city’s worst economic slump on record. Renewed sparring between the U.S. and China is also adding to the nervousness, with President Donald Trump saying he has little doubt China misled the world about the scale and risk of the coronavirus outbreak.
Among Hong Kong’s biggest decliners were China’s major oil producers, with the three heavyweights all dropping at least 7% after reporting first-quarter results and slashing capital-spending plans amid oil’s recent plunge. China Petroleum and Chemical Corp.’s 8.4% stock drop was the most since 2008.
The Hang Seng Index rose 4.4% in April, its first monthly gain of the year. The recovery, erased with Monday’s decline, came as investors made the most of a stabilization in global markets and the city’s cheap valuations. The index in March traded below book value for only the third time in almost as many decades.
Trading activity was slightly higher Monday than the 30-day average in Hong Kong, even as links with exchanges in Shanghai and Shenzhen remain shut through Tuesday due to a holiday in mainland China. Southbound trading last occurred on April 27.
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