Hong Kong stocks drop for sixth day on heightened policy tightening risks, US-China tensions

·3-min read

Hong Kong stocks fell after a surge in factory-gate prices in China stoked concerns about further policy tightening while both the US and China took seemingly more aggressive legal measures to counter each other on economic and political issues.

The Hang Seng Index slipped 0.1 per cent to 28,742.63 for its sixth consecutive days of losses, equalling its longest losing streak since late September 2019. The Shanghai Composite added 0.3 per cent, while the CSI 300 gauge edged up 0.1 per cent.

Alibaba Health Information Technology paced losers among blue chips, falling 2.5 per cent to HK$18.08. Xiaomi declined 1.6 per cent to HK$27.90, while Anta Sports fell 1.5 per cent to HK$154.90.

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Factory gate prices in China hit a 13-year high in May, a government report showed on Wednesday. The producer price index (PPI) rose 9 per cent from a year earlier, versus 6.8 per cent in April. This was faster than consensus for a 8.5 per cent increase in a Bloomberg survey.

In the US, the Senate on Tuesday passed a sweeping legislation designed to strengthen Washington’s hand in its escalating geopolitical and economic competition with China. The bill, which includes about US$250 billion worth of spending, touches on nearly every aspect of the tensed US-China ties. China separately was reported to be preparing to pass an anti-sanctions law of its own.

Limiting index losses, Chinese oil giants advanced as crude oil futures stayed above the US$70 threshold, a level last seen in October 2018 amid demand outlook. CNOOC gained 3 per cent to HK$9.02, while PetroChina rose 1.8 per cent to HK$3.41. Sinopec added 1.7 per cent to HK$4.16.

Property management firm Country Garden Services rose 2.2 per cent to HK$79.90. The company confirmed a final dividend of 26.58 HK cents per share for the 2020 fiscal year, compared to a dividend of 16.58 HK cents in 2019, according to a late night filing on Tuesday.

Chow Tai Fook Jewellery rose 6.1 per cent to HK$16 after earnings for the fiscal year ending March rose 108 per cent from a year earlier. Nomura raised their target price to HK$17.60 from HK$16.10 and maintained their buy rating after the results.

In Shanghai, Kaili Catalyst & New Materials debuted with a 320 per cent surge to 79.59 yuan from its listing price of 18.94 yuan.

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