Hong Kong stock market sentiment weighed down by rising tensions between Washington and Beijing

Deb Price

Hong Kong stocks fell Tuesday, as traders worried that fresh threats out of China over what it sees as US interference in its domestic affairs may threaten high-stakes trade negotiations under way between the world’s two largest economies.

The Hang Seng Index declined 0.2 per cent to 26,391.30, with early morning deeper losses largely recouped.

Meanwhile, the Shanghai Composite Index closed at 2884.70, up 0.3 per cent, while the Shenzhen Component Index rose 0.6 per cent to 9,657.65. Official data released over the weekend showing manufacturing expanded for the first time in six months in November continued to boost sentiment, analysts said.

Overnight Tuesday, President Donald Trump reinstated tariffs on steel and aluminium from Brazil and Argentina, and US manufacturing data showed continued weakness.

That added to traders’ fears that the US-China trade talks under way could be threatened by Beijing’s anger over US legislation supporting Hong Kong protesters, which Trump signed into law, and a proposal moving in Congress condemning alleged abuse of Muslim minorities in northwest China.

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New US tariffs on US$160 billion of Chinese goods are scheduled to go into effect on December 15.

“Investors are worried about the global trade war – not only US-China,” said Kenny Wen, Everbright Sun Hung Kai Wealth Management strategist.

“Investors are waiting on news from trade deal. And, approaching year end, they don’t prefer to hold stocks too long. Rather, they are focusing on short term investment opportunities. It makes the market volatile,” Wen said.

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China’s state-owned media Global Times tweeted Tuesday that China will release an “unreliable entity list” that includes US companies over the Xinjiang legislation that would impose sanctions against Chinese officials, especially those involved in the work of “re-education” camps, and ban the export of US goods and services to state agents there. The House of Representatives is scheduled to take the bill up overnight.

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Meanwhile, China responded to the US legislation supporting Hong Kong protesters by suspending visits of US military vessels and aircraft to Hong Kong and sanctioning five US-based NGOs.

“It may derail the trade talks and brings about new uncertainty,” Louis Wong Wai-kit, director of Philip Capital Management about China’s rebuke to the US.

Also, if “the manufacturing sector is brightening up, China may take a firmer stance against the US in trade talks,” he added.

In Hong Kong, CSPC Pharmaceutical Group, which plunged 9.7 per cent on Friday, continued to fall, declining 1.3 per cent to HK$17.60. The stock has been taking a pounding over the Chinese government’s negotiated drug prices in which, on average, prices of drugs eligible for reimbursement were cut by 50 per cent.

Subway operator MTR, a frequent target of ongoing protests, fell 1.1 per cent to HK$43.40.

Tencent dropped 0.6 per cent to HK$331.

Meanwhile, Alibaba fell 1.5 per cent to HK$192.60, in its third straight session of losses.

Snack producer Want Want China rose 1.6 per cent to HK$6.81 on positive earnings for the six months ending September 30.

Sa Sa International, Hong Kong’s biggest cosmetics retailer, fell 1.7 per cent to HK$1.69 after it announced it will close all of its 22 stores in Singapore and cut 170 jobs to save costs.

In mainland markets, which tend to be driven more by domestic than international news, Kweichow Moutai, the world’s biggest liquor maker, fell 1.3 per cent. The stock has been weighed down in part by the investigation into alleged bribery by Wang Chonglin, former deputy general manager of Kweichow Moutai. The investigation has just ended and prosecution will start soon.

“The mainland market looks more at the mainland factors, Hong Kong market takes the European and American factors into account,” said Francis Lun Sheung-nim, chief executive of GEO Securities.

Most of the sectors closed up, led by the automobile and hydrogen energy.

The losers were voice technology, animal vaccines and steel stocks.

Chinese authorities’ new report on the sales growth of new energy vehicles boosted auto parts and hydrogen energy stocks.

Yangzhou Yaxing Motor Coach, Automotive Tech, Shanghai Baolong, and Beijing Jingcheng Machinery Electric jumped by the 10 per cent upside limit.

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