Hong Kong Shutdown Weighs on Property Developer Stocks, Casinos

(Bloomberg) -- Hong Kong stocks fluctuated after a record number of new coronavirus cases in the city prompted the government to extend social-distancing measures.

The MSCI Hong Kong Index of equities exposed to the local economy fell as much as 1.5% before paring losses to 0.7% as of 2:47 p.m. local time. Wharf Real Estate Investment slid 5.9% to lead property stocks lower, while casino stocks dropped.

“The scale is much bigger than before and the number of new cases keeps rising,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. “It’s a very big overhang for local stocks.”

The latest virus outbreak in the Asian financial hub has exceeded the magnitude of its previous waves, a sign the worst may be yet to come in the pandemic. The resurgence in Hong Kong will be another blow to its economy, which is already undergoing one of its most challenging periods since the handover to Chinese rule in 1997.

Social-distancing measures including restaurant restrictions and gym closures will remain in place for at least another week, Chief Executive Carrie Lam said Sunday. Hong Kong’s government will also require that masks be worn in public indoor areas beyond public transport. The city had 108 new cases on Sunday, health officials said.

The MSCI Hong Kong Index retreated 1.4% last week, its worst showing since May 22. Sentiment has been hurt by the damage the pandemic has done to the economy, a crackdown on individual freedoms and the end of the city’s special status with the U.S.

Swire Pacific Ltd. and Link Reit lost at least 1% on Monday, while Galaxy Entertainment Group Ltd. fell 3.5% as the worst performing casino share.

Mainland investors were in line to be net buyers of the city’s equities for a 26th session, purchasing HK$3.4 billion worth, according to Bloomberg-compiled data.

©2020 Bloomberg L.P.