Hong Kong stocks halt best run since March on surprise Fed tapering talk as bitcoin roils cryptocurrency holders

·3-min read

Hong Kong stocks fell, reversing a three-day advance on concerns about policy tightening after the Federal Reserve indicated some officials may be ready to talk about tapering if the US economy sustains its growth momentum. Swings in bitcoin prices hit selfie-king Meitu and other cryptocurrency-linked stocks.

The Hang Seng Index declined 0.5 per cent from a one-week high to 28,450.29 on Thursday. Local stocks rose for three days, the best run since March, before a holiday on Wednesday. The Shanghai Composite Index lost 0.1 per cent to 3,506.94, extending a drop from an 11-week high.

Oil producers were loss leaders, with PetroChina and Sinopec tumbling by 4.6 per cent and 3.3 per cent respectively. Casino operators also weakened amid concerns about the worsening pandemic. Galaxy Entertainment dropped 2.1 per cent while Sands China fell 1 per cent.

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Minutes from the Fed’s policy meeting in late April, which were released on Wednesday, showed that some officials said it will be “appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” JPMorgan Chase analysts cited by Bloomberg viewed the intent as a surprise.

“The Fed’s changing tone on asset purchases have affected the Hong Kong market to some extent, which will cause Treasury yields to continue to rise,” said Ernie Hon, head of research at Essence International Securities in Hong Kong. “The Fed could scale back those asset purchases after this year, and any drop in stock prices will be gradual instead of abrupt.”

Meitu, a Chinese beauty app maker, fell 1 per cent to HK$1.98, bringing the losses this month to more than 17 per cent as cryptocurrency supporters continued to be whipsawed by wild swings in digital coins amid warning from China. Electric carmaker Tesla, which bought US$1.5 billion worth of bitcoin in February, has seen its stock slide 21 per cent this month.

Meitu said in March it bought US$22.1 million worth of ether and US$17.9 million worth of bitcoin, a move that co-founder Mike Cai Wensheng boasted as unprecedented for a Hong Kong-listed company. Bitcoin traded 3 per cent lower at $39,430 while Ethereum slumped 10 per cent to $2,646 earlier today, according to CoinMarketcap.com.

Among gainers, JD.com added 3.9 per cent to HK$281.40 after first-quarter net income more than tripled to 3.6 billion yuan and annual active customer accounts jumped 29 per cent. Meituan advanced 5 per cent to HK$273, the biggest winner, before its earnings report later this month.

Chong Hing Bank surged 48.3 per cent to HK$20.40. Its parent Yue Xiu Enterprises offered HK$20.80 per share to buy the 25 per cent stake it does not already own and take the lender private.

Two new listings surged in Shanghai. Sinopep- Allsino Bio Pharmaceutical surged by almost 400 per cent to 77.50 yuan, Shenzhen Chuangyitong Technology soared 295.8 per cent to 51.69 yuan.

Resources-related stocks declined as China’s cabinet stressed that it will curb rapid surges in prices of commodities such as coal, steel and iron ore. Zijin Mining fell 4.3 per cent and Shanxi Coal International Energy dropped 9.5 per cent.

Stocks in Taiwan slipped 0.6 per cent as authorities tightened restrictions to combat the pandemic, while focused on keeping semiconductor production and supply humming. Benchmarks in South Korea slid 0.3 per cent, while prices in Japan rose 0.2 per cent.

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