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Markets

Tech slump drags Hong Kong shares down as Sino-US tensions rise

  • China said on Thursday that the United States was abusing the concept of national security to oppress foreign companies following the blacklisting report.
15 Oct 2020

Hong Kong shares slumped on Thursday as investor sentiment took a blow from escalating Sino-US tensions, a surge in global COVID-19 cases and the impasse over a US stimulus package to boost the world's largest economy.

At the close of trade, the Hang Seng index was down 508.55 points or 2.06pc at 24,158.54.

The Hang Seng China Enterprises index fell 1.6pc to 9,762.28.

Sentiment took a hit with tech shares leading the decline. Alibaba Group Holding slumped 4.30pc after Reuters reported that the Trump administration is considering adding Alibaba-backed Ant Group to a trade blacklist before the financial technology firm is set for a huge dual listing in Shanghai and Hong Kong.

China said on Thursday that the United States was abusing the concept of national security to oppress foreign companies following the blacklisting report.

Victor Huang, head of investment strategy at Guotai Junan International in Hong Kong, said the report had prompted a sell-off, but that valuations were already stretched.

He said global institutional investors were also adopting more conservative stances ahead of US elections in November to guard against volatility after booking strong profits this year, while an elusive US stimulus package meant a dearth of excess liquidity to boost valuations further.

US Treasury Secretary Steve Mnuchin said Wednesday that a coronavirus economic relief package would be hard to reach before the Nov. 3 elections.

The Hang Seng tech sub-index dropped 3.57pc, with index heavyweight Tencent Holdings losing 3.75pc.

A financials sub-index also dropped 1.86pc after the US State Department on Wednesday warned international financial institutions doing business with individuals deemed responsible for China's crackdown in Hong Kong that they could soon face tough sanctions.

In China, soft September inflation data underscored the challenges still faced by China's economy.