Stocks in Hong Kong suffered their biggest one-day drop in more than three months on Monday as fresh protests saw a demonstrator shot by police and chaos across the city’s transport network.
The benchmark Hang Seng closed 2.6 per cent lower amid a strike by anti-government protesters and disruptions to transport networks in the Chinese territory, which has been rocked by months of sometimes violent political unrest.
Police confirmed live fire was used and one man had been shot in Sai Wan Ho, a neighbourhood on Hong Kong island, in an incident that was filmed and circulated on social media. A separate video that also went viral online, showed what appeared to be protesters dousing a man in liquid and then setting him on fire.
Property and retail stocks were among the names hardest hit on Monday, with Swire Pacific, New World Development, Sun Hung Kai Properties and Wharf Real Estate Investment all shedding between 4 and 7 per cent. The 2.6 per cent drop in the benchmark was the steepest since early August. 49 of the Hang Seng’s 50 stocks were down on the day.
Companies across the city have been slammed by a slump in tourism and retail sales partly caused by five months of protests and political deadlock. Business activity in the territory fell at its sharpest pace in more than two decades in October, data showed last week.
Andrew Sullivan, a director at broker Pearl Bridge Partners, said investors were concerned about ramifications for Beijing’s trade talks with Washington as a result of developments in Hong Kong. “When you see somebody being shot on video and it is going viral, it puts [President Trump] in an awkward position,” he said. “The concern is: What is the reaction going to be out of the US?”
Mr Sullivan, whose commute into Hong Kong’s business district on Monday took about two hours longer than usual due to the protests, said markets were beginning to speculate about potential intervention by the Chinese military and the cancellation of local elections scheduled for November. Either could further dent confidence in Hong Kong’s future as a global finance hub.
The Hang Seng, the world’s worst-performing equity market in the third quarter, rallied 9 per cent between early October and early November as investors lined up bets that protests would fizzle out.
“The striking thing is how strong the market has been,” said Richard Harris, a veteran investor in the city and founder of Port Shelter Investment Management, noting that Monday’s serious clashes came after months of simmering unrest. “I was a buyer until today.”
The Hong Kong market, home to a number of China-focused stocks, was also hit by comments from Mr Trump over the weekend suggesting he had not yet agreed to remove tariffs on Chinese goods. Apple supplier AAC Technologies dropped 4 per cent.
Concerns over the trajectory over the trade war and its impact on the world’s second-biggest economy also reverberated through mainland China’s equity markets. The CSI 300 of Shanghai- and Shenzhen-listed stocks fell 1.8 per cent, in what is also the benchmark’s biggest one-day fall since August.
Gerry Alfonso, director of research at broker Shenwan Hongyuan Securities, said selling has also been exacerbated by Alibaba’s Singles’ Day, as retail investors offloaded shares to take part in the world’s biggest online shopping extravaganza. That has “added a lot of pressure on the market,” he added.
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