Hong Kong stocks dropped the most in two months, as traders remained wary of simmering tensions between Beijing and Washington, while HSBC Holdings slumped to the lowest level in more than a decade.
The Hang Seng Index dropped 2.1 per cent to 23,950.69 at the close of trading, capping its steepest loss since July 24. HSBC provided the biggest drag on the city’s benchmark, after Global Times newspaper reported that the British bank could be included in China’s list of “unreliable entities” for endangering national security.
HSBC was also named in an investigative report by the International Consortium of Investigative Journalists on banks that “kept profiting from powerful and dangerous players” in the past two decades even after the US imposed penalties on the institutions.
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The Shanghai Composite Index slipped 0.6 per cent to 3,316.94.
Over the weekend, President Donald Trump said he had approved the bid by Oracle for the American business of TikTok, the Chinese video-sharing app that is seen by the White House as a threat to national security. Meanwhile, traders were also keeping a close watch on the developments in US fiscal stimulus talks and China’s loan prime rate, one of its benchmarks on lending rates, which was left unchanged this month.
“Risk is trading uncomfortably [and with] uncertainty,” said Stephen Innes, a strategist at AxiCorp. “It is questionable just how high sentiment can fly this week as the drip-feed of negatives continues to weigh on risk sentiment.”
HSBC tumbled 5.3 per cent to HK$29.30 for the lowest close since April 2009, taking this year’s decline to 52 per cent. The stock contributed to about a fifth of the drop in the Hang Seng Index. Possible penalties by China include restrictions on trade, investments and visa issuances.
Other big decliners included Xiaomi and Sands China, which fell at least 4.8 per cent.
On the plus side, Guolian Securities surged 36 per cent to HK$4.85 after saying that it plans to acquire Sinolink Securities, its bigger rival on the mainland, through a stock swap. Guolian will also buy a 7.8 per cent in Sinolink from its biggest shareholder Yongjin Group, according to an exchange statement. Both were suspended on mainland exchanges on Monday.
All five initial public offerings (IPOs) in China surged on the first day of trading. Zhejiang Lante Optics, a maker of optical products, was the best performer, surging 126 per cent from the initial public offering price to 34.83 yuan on the Star Market in Shanghai. 3Peak Incorporated, another Star board debutant that makes electronics components, jumped 77 per cent to 205 yuan.
The three other IPOs, including Guangdong Tengen Industrial Group and Chongqing Baiya Sanitory Products, all rose by 44 per cent, the maximum allowed for new shares trading on the main boards
More from South China Morning Post:
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- How you should navigate Hong Kong, China stocks during an increasingly hostile Trump presidency
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- HSBC, JPMorgan, StanChart and others processed trillions of dollars of transactions despite concerns over potential crimes, reports say