ADVERTISEMENT

Hong Kong Stocks Little Changed After Worst Quarter Since 2015

Hong Kong Stocks Set for Worst Start to Month Since January

(Bloomberg) -- Hong Kong’s financial markets showed resilience after a day of violent clashes between protesters and the police brought much of the city’s center to a standstill.

The benchmark Hang Seng Index was little changed Wednesday, closing down 0.2% on volume that was 30% lower than the 30-day average. Trading in the local dollar was also muted, while interbank borrowing costs fell. Thin liquidity in stocks was compounded by a lack of mainland buyers, with onshore markets and trading links shut for a holiday.

The Hang Seng measure handed investors the world’s worst returns last quarter, losing 8.6% for the worst three-month period since 2015. Reeling from a tumbling yuan and the trade war, months of often-violent local unrest have added pressure on earnings for some of Hong Kong’s biggest companies. China and the U.S. are expected to resume trade talks this month.

‘People are cautious about forthcoming negotiations between the U.S. and China,” said Jessie Guo, equity research strategist at China Merchants Securities HK Co. “Today’s weakness is also a reflection of the protests in Hong Kong -- that has impacted investors a lot.”

Hong Kong Stocks Little Changed After Worst Quarter Since 2015

Tension remained high in the city a day after a protester was shot by police for the first time in almost four months of unrest. Wednesday’s biggest decliners included BOC Hong Kong Holdings Ltd., whose offices were attacked by protesters on Tuesday. MTR Corp., which has seen its stations targeted in the unrest, fell 1.1%.

The protests and the police response are taking an increasing toll on the economy, with the city’s retail sales value falling by a record 23% year-on-year in August, according to official data released after the market close. A government spokesman said the result was the worst ever.

There is still room for optimism for stocks. Respondents in a recent Bloomberg survey forecast the city’s equities will end the year on a high note as attractive valuations, easing trade tensions and potential stimulus from Beijing offer some consolation. Data since 1989 show Hong Kong stocks rise an average of nearly 6% in the final three months of a calendar year, at least twice as much as any other quarter.

To contact the reporters on this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net;Elena Popina in New York at epopina@bloomberg.net

To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, David Watkins, Kevin Kingsbury

©2019 Bloomberg L.P.