Hong Kong stocks fell the most in a month as traders adopted a risk-averse mood amid mounting geopolitical tension after the US killed a top Iranian military commander in an air strike.
The Hang Seng Index slid 0.8 per cent, or 225.31 points, to 28,226.19 on Monday, the steepest decline since December 4. Almost all major benchmarks elsewhere in Asia sank, with Japan’s Nikkei 225 Index retreating 1.9 per cent for the worst performance among them. Gold futures traded at a six-year high after the attack.
The mainland’s Shanghai Composite Index fared better, falling less than 0.1 per cent, as sell-offs were tempered by the forthcoming signing of a phase-one trade deal between Beijing and Washington.
“Equity markets across the region will continue to remain under pressure,” said Jeffrey Halley, an analyst at Oanda in Singapore. “Haven assets remain solidly in demand across the board in Asia.”
All but eight constituents of the 50-member Hang Seng Index fell, with property stocks providing the biggest drag. Wharf Real Estate Investment dropped 3.2 per cent to HK$45.15 and Country Garden Holdings lost 2.1 per cent to HK$12.32.
Oil producers rallied as the US attack boosted crude oil futures to their highest level since April. PetroChina rose 4 per cent to HK$4.20 and Cnooc gained 3.6 per cent to HK$13.72.
Mainland China’s stocks recovered almost all their intraday losses as the South China Morning Post reported that Beijing’s trade delegation tentatively plans to travel to Washington on January 13 to sign the phase-one deal that would herald an official truce in the trade war between the world’s two biggest economies.
The Chinese market will probably extend a 6.2 per cent gain in December, supported by monetary policy loosening by central banks, the phase-one trade deal, financial deleveraging and overseas inflows, HSBC Jintrust Fund Management said.
Chinese suppliers of Tesla including Zhejiang Sanhua Intelligent Controls were the bright spot, as Citic Securities said a 9 per cent price cut in Model 3 cars in China by the US electric-car maker would benefit the sector.
The Model 3 will be sought-after in the Chinese market this year as the price cut is set to boost demand significantly, and sales will exceed more than 300,000 units, Citic Securities said in a note on Monday.
Zhejiang Sanhua surged 6.8 per cent to 19.25 yuan, Ningbo Joyson Electronic climbed 8.2 per cent to 19.18 yuan and Huayu Automotive Systems added 3.8 per cent to 27.08.
Chinalin Securities shed 5.3 per cent to 14 yuan after it received a notice from the China Securities Regulatory Commission that will limit expansion of its business for three months because of mismanagement at its subsidiaries. The brokerage said in a separate statement that net income for 2019 probably increased by more than 30 per cent from a year earlier.
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