Hong Kong stocks complete longest losing streak in 10 weeks on casino slump, US rate outlook

·4-min read

Hong Kong stocks fell for a fourth day, capping the longest losing streak in 10 weeks, as a weaker-than-expected US job report stoked concerns about global economic recovery while traders stood aside following official remarks on higher US interest rates.

The Hang Seng Index dropped 0.5 per cent to 28,787.28 at the close. A four-day slide marked the benchmark’s worst sequence since March 25. In mainland China, the Shanghai Composite Index rose 0.2 per cent after official reports showing both exports and imports increased in May, but below market expectations.

Macau casino stocks sank as the former Portuguese colony banned the entry of non-local residents via Guangdong province, where a cluster of Covid-19 cases have emerged while Hong Kong tightened quarantine rules. Galaxy Entertainment Group lost 2.1 per cent to HK$62.35 and Sands China lost 1.9 per cent to HK$33.70.

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Other big losers on Friday included Geely Auto, which slid 5.2 per cent to HK$21.10, Xiaomi Corp which tumbled 4.1 per cent to HK$28.35 and Tencent Holdings which slumped 1.8 per cent to HK$600.50.

In Friday’s job report, the US employment rate fell to 5.8 per cent in May from 6.1 per cent in April, as companies added 559,000 jobs. Meanwhile, US workers’ wages registered strong gains, adding pressure on the Federal Reserve to fine-tune its monetary policy to balance growth and inflation risks.

“The May non-farm payrolls report showed that the economy is still far from showing substantial progress with the labour market recovery,” said Edward Moya, an analyst at Oanda.

Hong Kong’s stocks have reverted to its rangebound trading pattern as a lack of catalysts scuppered a breakout attempt last week amid renewed concerns about US sanctions on Chinese firms. Treasury Secretary Janet Yellen said President Joe Biden should push on with his US$4 trillion spending plans, adding that a “slightly higher” interest rate environment would be a “plus” should they quicken inflation.

“If we ended up with a slightly higher interest rate environment, it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said, according to Bloomberg on Sunday.

Other major markets in Asia were mixed on Monday, with stock benchmarks in Japan and Taiwan retreating slightly and those in Australia and Taiwan advancing.

Traders are also keeping a close watch on China’s factory-gate inflation data that is due on Wednesday. The government took measures over the past month to curb surging commodity prices. Producer prices probably rose 8.5 per cent in May, accelerating from a 6.8 per cent in April, according to consensus in a Bloomberg survey of economists.

On the bright side, WH Group, the world’s biggest meat processor, surged 7.7 per cent to HK$7.33 after offering as much as HK$14.95 billion (US$1.93 billion) to buy back 13 per cent of its capital at a premium to market.

CNOOC climbed 2.4 per cent to HK$8.72 and China Petroleum & Chemical, also known as Sinopec, rose 0.2 per cent to HK$4.29. Oil futures rose as much as 0.6 per cent to US$70 in Asian trading after upbeat comments by major trader Vitol Group on demand outlook. Crude topped US$70 a barrel for the first time since 2018.

All the four companies rose on their first day of trading on the mainland’s exchanges. Among top performers, Shenzhen Sosen Electronics, which makes light-emitting diode drivers, surged 450 per cent in Shenzhen. Wuxi Zhenhua Auto Parts gained the least, rising 44 per cent to 16.16 yuan in Shanghai.

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